Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 12
ones,
past
to
future,
short term to long term
and
base--‐case
to
best--‐case
projections.
It
is
far
from
being
easy.
Formulas of the EVA and MVA
EVA
=
(ROIC --‐ WACC) * Invested Capital
Market Value Added (MVA) = discounted sum of all expected EVA's
=
NOPAT --‐ Capital Charge
=
NPV of the company
+
LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE
-
N°99
- NOV /
DEC / JAN 2018
invested
capital
+
MVA
12
=
= Enterprise
Value
There
is
no one--‐fits--‐all solution or recipe.
What
can
be
noticed,
is
some
lessons
or
best
practices
which
could
be
considered.
Growth
can
destroy
value
and
is
not
an
absolute
quest.
While
focusing
on
organic
growth
and
on
acquisitions
is
vital,
it
doesn't
mean
always
value
creation
and
doesn't
guarantee
it.
The
risk
element
must
be
into
performance
consideration
in
M&A.
There
are
limits
to
iversification
of
needs
assets.
A
risk
A good
management
ofdworking
capital
helps
the firm
The best and
optimum
measure
oftaken
financial
to build
value, pas
well as
thegoptimization
remains themitigating
most important
Companies
factor
quest
which
for
is
"CFO's.
classic"
is
the
diversification.
However,
roduct
and
eographical
of the Finance Supoften focused
on book values
andaaccounting
(arecipe
fply
There is also
capital
(e.g. leases
diversification
aren't
lways
the
ameasures
ppropriate
or
vChain.
alue
generation.
Woff-B/S
ith
more
correlation
than
and penposteriori) e.g.
ROA,
ROE,
EPS
growth
and
profit
margins.
On
sions,
which
are
now
revisited
by
IFRS
and
accounted
for by
ever,
it
doesn't
bring
security
and
protection
when
a
line
of
business
is
facing
difficulties.
They
are
the other side, some firms focus on market-based measures,
rating agencies in economic debt assessment). The ultimate
tempted
to
invest
excess
cash
with
current
negative
interest
rates.
The
forecasting
of
financial
e.g. long term stock performance (more a prospective view).
goal is to invest in sustainable assets which provide returns
performance
is
tough
as
it
often
doesn't
include
downside
scenarios.
The
base
case
scenarios
aren't
At the end of the day, the solution may be median, hybrid and
in excess of cost of capital. The problem is in the price to pay
expected
cSome
ash--‐flows.
The
evaluation
f
passet,
otential
acquisitions
is
often
overestimated
a mix of theunfortunately
different typesthe
of measures.
measures
foroan
which
should remain
reasonable
in order not to
and
do
could
destroy
the
value
mid--‐run.
W
hen
do
you
your
capital,
it
future
is
recommended
to
allocate
all
costs.
(booking ones)
not include
riskin
dimension.
They
notallocate
disproportionate
earnings compared
to capital
of
associated
capital.
For
xample,
the
working
capital
which
is
a
kwhen
ey
focus
for
treasurers.
With
urrent
account forforms
the risk
toean
investment.
The EconoThe risk
potential
acquisitions
arecso
highly valued lays
goodwill impairment
risk. It isethe
killer
factor
mic Value Added
and iMarket
are market
values.could
inbthe
negative
nterest
Value
rates,
Added
a
distribution
company
e
interested
in
paying
suppliers
arlier
with
ad in lot of
aborted
deals.
The dilemma
is to
oppose booking
to market ones,
hoc
discounting.
The
dmeasures
ynamic
discounting
helps
firms
to
better
manage
the
WorkCap.
A
good
past to future,
short term o
tof
long
termcand
base-case
to bestmanagement
working
apital
needs
helps
the
firm
to
build
value,
as
well
as
the
optimization
of
the
Furthermore, the hurdle rate should be reduced, as global
case projections. It is far from being easy.
Finance Supply Chain.
There
is
also
off--‐B/S
capital
(e.g.
leases
and
pensions,
which
are
now
revisited
by
interest rates remain at historic lows (i.e. Hurdle rate = WACC
IFRS
and
accounted
for
by
rating
agencies
in
economic
debt
assessment).
The
ultimate
goal
is
to
invest
+ hurdle rate delta). The rate used by MNC's to evaluate an
There is no one-fits-all solution or recipe. What can be
in
sustainable
which
provide
eturns
of
cost
of
cis
apital.
The
problem
is
in
the
price
to
pay
rate
far too
high.
Corporations
look
at hurdle
noticed, is some
lessons orassets
best practices
whichrcould
bein
excess
acquisition
for
a
n
a
sset,
w
hich
s
hould
r
emain
r
easonable
i
n
o
rder
n
ot
t
o
d
isproportionate
f
uture
e
arnings
c
ompared
rather than at real cost of capital. The hurdle rate deltas are
considered. Growth can destroy value and is not an absolute
capital
con
osts.
The
rgrowth
isk
when
potential
acquisitions
increasing
are
so
highly
valued
lays
in
thas
he
gdecreased
oodwill
impairment
as cost
of capital
over time. But
quest. Whileto
focusing
organic
and
on acquisitions
risk.
It
mean
is
the
always
killer
fvalue
actor
creation
in
lot
of
aand
borted
deals.
with a long period of low interest rates, time has come to
is vital, it doesn't
doesn't
adjust rates used.
guarantee it. The risk element must be taken into consideFurthermore,
the
hto
urdle rate should be reduced,
ration in M&A.
There are limits
diversification of assets. A as
global
interest
rates
remain
at
historic
lows
(i.e.
Hurdle
rate
=
Wis
ACC
+
hurdle
rate
delta).
The
rate
used
by
MNC's
to
evaluate
an
acquisition
is
far
too
risk mitigating
factor
which
"classic"
is the
diversification.
high.
Cand
orporations
look
diversification
at
hurdle
rate
aren't
rather
than
at
real
cost
of
capital.
The
hurdle
rate
deltas
are
However, product
geographical
always the appropriate
Withomore
increasing
arecipe
s
cost
ofor
f
cvalue
apital
generation.
has
decreased
ver
time.
But
with
a
long
period
of
low
interest
rates,
time
correlation has
thancever,
security
ome
tito
doesn't
adjust
rbring
ates
u
sed.
and protection
when a line of business is facing difficulties. They are tempted to investSustainable excess returns in the long run
excess cash with current negative interest rates.
The forecasting of financial performance is tough as it often
The
downside
objective
scenarios.
must
be
to
The
rethink
and
to
allocate
capital
in
order
to
maintain
competitive
doesn't include
baseinvestments
case scenarios
advantages
hile
ensuring
sustainable
excess
returns.
It
is
of
course
easier
to
say
than
to
achieve...
The
aren't unfortunately
thew
expected
cash-flows.
The evaluation
of potentialhighest
acquisitions
is often
overestimated
possible
ROIC
should
not
be
and
the
could
target.
It
could
lead
to
over--‐allocating
assets
to
a
business
line
destroy value
When
allocate
it isA
portfolio
of
assets
must
be
well
balanced.
Conversely,
or
in
to
mid-run.
only
focus
on
ryou
iskier
assets
your
and
capital,
ventures.
recommended
to allocate all forms
of capital.
For example,
under--‐allocation
of
capital
to
a
business
line
could
also
have
negative
impacts.
It
is
advised
not
to
focus
the workingtoo
capital
which
a key
focus
for treasurers.
With
much
on
RisOIC
level
neither
to
search for highest average ROIC to create maximum value.
Of
course
current negative interest rates, a distribution company could
be interested in paying suppliers earlier with ad hoc discounting. The dynamic discounting helps firms to better manage
the WorkCap.
As for working capital management, capital
allocation is an alchemy requiring a precise
weighting of components to succeed and
generate expected added-value.
Table des matières de la publication Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018
COUVERTURE
SOMMAIRE
EDITORIAL
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW with Dick Oskam, Head of Sales for Transaction at ING
FOCUS
Value generation - How to create (more) value for the company with a better capital allocation
Managing bank accounts, the Cinderella of treasury management
Treasury on the Digital Front Line
FORUM
Implementation of EU Tax Rules
Innovative payments solution
Construction de portefeuille : combiner gestion active et passive
Decision Time: Investing in Money Funds after EU Reforms
Payments as a Strategy
Are asia’s corporates ready to repo?
The evolving role of treasurers
THE FINANCIAL RISK OBSERVATORY
NEWS
LIFE BEYOND NUMBERS
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - COUVERTURE
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 2
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - SOMMAIRE
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 4
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - EDITORIAL
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - FINANCIAL HIGHLIGHTS Luxembourg Tax News
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 7
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - INTERVIEW with Dick Oskam, Head of Sales for Transaction at ING
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 9
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Value generation - How to create (more) value for the company with a better capital allocation
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 11
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 12
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 13
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Managing bank accounts, the Cinderella of treasury management
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 15
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 16
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 17
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 18
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Treasury on the Digital Front Line
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 20
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 21
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Implementation of EU Tax Rules
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 23
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Innovative payments solution
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 25
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Construction de portefeuille : combiner gestion active et passive
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 27
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Decision Time: Investing in Money Funds after EU Reforms
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 29
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Payments as a Strategy
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 31
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Are asia’s corporates ready to repo?
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 33
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - The evolving role of treasurers
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 35
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 36
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - THE FINANCIAL RISK OBSERVATORY
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 38
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 39
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 40
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - NEWS
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 42
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Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 52
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - LIFE BEYOND NUMBERS
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