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TAKE YOUR
BUSINESS FURTHER
FINANCIAL MAGAZINE
UNIVERSIDAD AUTÓNOMA DE NUEVO LEÓN
Facultad de Contaduría Pública y Administración
School of Business
Team:
Jessica M. Ramirez Gomez 1591768
Ruth Paola Meza Arredondo 1589305
Lizeth Garza González 1580866
Adrian Roberto Reyna Flores 1592397
Viviana de la Garza Gutiérrez 1582002
America Sarai Arreaga Garza 1580926
Group: 4Fi
Professor: Reynol Villarreal
April 30th, 2015
Cd. Universitaria de Nuevo León
Fo
un
dati
on
s o
f
Fin
an
cia
l M
an
ag
em
en
t
Fin
al P
roje
ct
1. FINANCIAL RATIOS…………………………………………. 1
2. A.R. CREDIT MANAGEMENT
Dun & Bradstreet………………………………………… 6
Emma Score……………………………………………….. 7
Paydex……………………………………………………….. 8
D&B rating…………………………………………………. 9
Credit Hold………………………………………………… 11
3. BANKRUPTCY………………………………………………….. 15
4. MEXICAN FINANCIAL SYSTEM
Conducef……………………………………………………. 19
Banco de México…………………………………………. 21
Bolsa Mexicana de Valores/Afores………………… 24
Marketable Securities………………………………….. 28
LIBOR vs TIIE……………………………………………. 29
5. CONCLUSIONS………………………………………………… 30
6. REFERENCES…………………………………………………… 33
1. FINANCIAL RATIOS…………………………………………. 1
2. A.R. CREDIT MANAGEMENT
Dun & Bradstreet……………………………………….. 6
Emma Score………………………………………………. 7
Paydex……………………………………………………….. 8
D&B rating…………………………………………………. 9
Credit Hold………………………………………………… 11
Credit Terms………………………………………………. 13
3. BANKRUPTCY………………………………………………….. 15
4. MEXICAN FINANCIAL SYSTEM
Conducef……………………………………………………. 19
Banco de México…………………………………………. 21
Bolsa Mexicana de Valores/Afores…………………
24
Marketable Securities………………………………….. 28
LIBOR vs TIIE……………………………………………. 29
5. CONCLUSIONS………………………………………………… 30
6. REFERENCES…………………………………………………… 33
Example of Common size ratios from the Balance Sheet
FINANCIAL
RATIOS
?
Why Use
Financial
Ratio Analysis
Each of the items on the income statement
would be calculated as a percentage of
total sales. (Divide each line item by total
sales, and then multiply each one by 100 to
turn it into a percentage.) Similarly, items
on the balance sheet would be calculated
as percentages of total assets (or total
liabilities plus owners’ equity).
Types of Ratios
One of the most useful ways for the owner of a small
business to look at the company’s financial
statements is by using “common size” ratios.
Common size ratios can be
developed from both balance sheet and
income statement items. It is just calculated
each line item on the statement as a
percentage of the total.
The use of financial ratios is a time-tested
method of analyzing a business. Wall
Street investment firms, bank loan officers
and knowledgeable business owners all
use financial ratio analysis to learn more
about a company’s current financial health
as well as its potential.
FINANCIAL RATIOS 1
Debt to equity ratio is a financial, liquidity ratio that compares a company's total debt to total equity.
The debt to equity ratio shows the percentage of company financing that comes from creditors and investors.
A higher debt to equity ratio indicates that more creditor financing (bank loans) is used than investor
financing (shareholders).
Example:
Emily Ltd has the following
information:
Trade debtors $100,000
Trade creditors $80,000
Credit sales $300,000
Credit purchases $120,00
Cost of sales $70,000
Opening stock $60,000
Closing stock $20,000
Bank $66,000
Calculate the relevant Efficiency
Ratios.
Solution:
Average Collection Period = (100,000 / 300,000) *
365 = 121.7 days
Average Payment Period = (80,000 / 120,000) * 365
= 243.3 days
Current Asset Turnover = 70,000 / (100,000 +
20,000 + 66,000) = 0.38
Average stock = (60,000 + 20,000) / 2 = $40,000
Stock Turnover Period = (40,000 / 70,000) * 365 =
208.6 days
Cash Cycle = 208.6 + 121.7 - 243.3 = 87 days
Example
Assume a company has $100,000
of bank lines of credit and a
$500,000 mortgage on its property.
The shareholders of the company
have invested $1.2 million. Here is
how you calculate the debt to
equity ratio.
FINANCIAL RATIOS 2
Efficiency Ratios. Two common efficiency ratios are inventory turnover and receivables turnover.
Inventory turnover is the ratio of cost of goods sold to inventory. A high inventory turnover ratio means
that the company is successful in converting its inventory into sales. The receivables turnover ratio is the
ratio of credit sales to accounts receivable, which tracks outstanding credit sales. A high accounts
receivable turnover means that the company is successful in collecting its outstanding credit balances.
Formulas:
1) Average Collection Period = (Average Trade
Debtors / Credit Sales) * No. of Days
2) Average Payment Period = (Average Trade
Creditors / Credit Purchases) * No. of Days
3) Inventory Turnover Ratio = Cost of goods sold /
Average inventory held
4) Debtors Turnover Ratio = Net Credit Sales /
Average Trade Debtors
5) Total Assets Turnover = Net Sales / Total Assets
6) Degree of Operating Leverage = % change in
EBIT / % change in Sales
7) Creditors Turnover Ratio = Net Credit Purchases /
Average Payable
8) Days Sales Outstanding Ratio = Accounts
Receivable / Average sales per day
9) Working capital turnover Ratio = Cost of sales /
Average net working capital
10) Current Asset Turnover Ratio = Cost of goods
sold / Current assets
11) Stock Turnover Period = (Average stock / Cost of
goods sold) * No. of Days
12) Cash Cycle = Stock Turnover Period + Average
Collection Period - Average Payment Period
Profitability ratios indicate management's ability to convert sales dollars into profits and
cash flow. The common ratios are gross margin, operating margin and net income margin. The gross
margin is the ratio of gross profits to sales. The gross profit is equal to sales minus cost of goods
sold. The operating margin is the ratio of operating profits to sales and net income margin is the ratio
of net income to sales. The operating profit is equal to the gross profit minus operating expenses,
while the net income is equal to the operating profit minus interest and taxes. The return-on-asset
ratio, which is the ratio of net income to total assets, measures a company's effectiveness in
deploying its assets to generate profits. The return-on-investment ratio, which is the ratio of net
income to shareholders' equity, indicates a company's ability to generate a return for its owners.
FINANCIAL RATIOS 3
Operating ratios There are many types of ratios you can use to
measure the efficiency of your company’s
operations. In this section we will look at seven
that are commonly used and compared. There
may be others which are common to a specific
industry or that you will create for a specific
purpose within your company. These “efficiency
ratios” utilize data from both the Balance Sheet
and the Profit & Loss Statement.
The eight ratios we will cover are:
• Inventory Turnover Ratio
• Inventory Days on Hand
• Accounts Receivable Turnover Ratio
• Accounts Receivable Days on Hand
• Accounts Payable Turnover
• Accounts Payable Days
• Cash Cycle
• Return on Assets
Example of one tipe of Operating Ratios:
Inventory Turnover Ratio
To calculate the ratio we use the formula:
Inventory Turnover Ratio = Cost of Goods Sold /
Total Inventory
From the Roots Up Company has an Inventory
Turnover Ratio of:
$4,895,000 / $896,000 = 5.463
(From the Roots Up Company has “Other
Inventory” on the Balance Sheet. This figure is
excluded from the calculation, as it is not
considered operating inventory.)
Solvency ratios measure the stability of a company and its ability to repay debt. These ratios
are of particular interest to bank loan officers. They should be of interest to you, too, since solvency
ratios give a strong indication of the financial health and viability of your business. We will look at
the following solvency ratios: • Debt-to-Worth Ratio • Working Capital • Net Sales to Working Capital
• Z-Score
Example of one type of Solvency Ratio: Working Capital Working
Lenders use it to evaluate a company’s ability to weather hard times. Loan agreements often specify that
the borrower must maintain a specified level of working capital.
Working capital is computed as follows: Working Capital = Total Current Assets - Total Current Liabilities
Using the balance sheet data for the From the Roots Up Company, we can compute the working capital
amount for the company. From the Roots Up Company working capital: $2,463,000 - $773,000 =
$1,690,000 From the Roots Up Company has $1,690,000 in working capital.
FINANCIAL RATIOS 4
Liquidity ratios measure your
company’s ability to cover its expenses. The
two most common liquidity ratios are the
current ratio and the quick ratio. Both are
based on balance sheet items
Current Ratio
The current ratio is a reflection of financial strength. It
is the number of times a company’s current assets
exceed its current liabilities, which is an indication of
the solvency of the business.
The formula to compute the current ratio is: Current
Ratio = Total current assets / Total current liabilities
Using the earlier balance sheet data for the fictional
From the Roots Up Company, we can compute the
company’s current ratio. From the Roots Up
Company Current Ratio: $2,463,000 / $773,000 =
3.19 This tells the owners of the From the Roots Up
Company that current liabilities are covered by
current assets 3.19 times. The current ratio answers
the question, “Does the business have enough
current assets to meet the payment schedule of
current liabilities with a margin of safety?”
Quick Ratio
The quick ratio is also called the “acid test”
ratio. That’s because the quick ratio looks
only at a company’s most liquid assets and
compares them to current liabilities.
The quick ratio tests whether a business
can meet its obligations even if adverse
conditions occur.
Here is the formula for the quick ratio: Quick
Ratio = (Total Current Assets - Total
Inventory) / Total Current Liabilities
Assets considered to be “quick” assets
include cash, stocks and bonds, and
accounts receivable. In other words, all of
the current assets on the balance sheet
except inventory.
Example of Common size ratios from the Income
Statement
FINANCIAL RATIOS 5
Dun and Bradstreet
arose answering to the need of the
merchants of the East of the USA of
evaluate their potential clients, who
were going spreading towards the
West of the country. Already in this
moment, in the USA, there was
detected the need to possess quality
information to take quality decisions.
This is how D&B turned into a key
actor into the economic development
of the USA.
Dun & Bradstreet (D&B) grows the
most valuable relationships in
business. By uncovering truth and
meaning from data, they connect
customers with the prospects,
suppliers, clients and partners that
matter most, and have since 1841.
Nearly ninety percent of the Fortune
500, and companies of every size
around the world, rely on their data,
insights and analytics.
It is the world leader in providing
commercial information to the areas of
credit, marketing, purchasing,
collection management and support
services areas. Dun & Bradstreet
information supports decision-making
that are taken every day on day in the
world of the businesses.
In the business-to-business
marketplace, Dun & Bradstreet is the
indispensable source of content;
information-management expertise
and business insight that customers
need to make more informed decisions
and build profitable relationships.
The database of Dun & Bradstreet
covers more than 220 million
businesses in over 200 countries.
The long path of more than 150 years
in the world, has allowed D&B to
crystallize strong bonds with the
different sources of information:
companies, banks, public offices,
public records, associations, etc…
This experience has been capitalized
for D&B and overturned in
developments of efficient
methodologies of compilation, update,
processing and transmission of
information towards the client, always
orientated to covering with the aims of
the clients.
AR CREDIT MANAGEMENT
6
D&B EMMA SCORE
EMMA SCORE (Emerging Market
Mediation Alert Score) is a model of
evaluation of risk developed for
countries on emergent markets. It is a
punctuation developed with statistical
profile approach of information, which
predicts the possibility that a business
should be in risky condition of
instability or distrust, that is to say that
has problems of paying the debts
during 12 months and that finally stops
paying.
Emerging markets do not have the
pairings of trade behavior data and
actual bankruptcy filings to pass D&B’s
criteria for a standard delinquency or
failure score. The EMMA score
acknowledges that there are pockets
of an emerging market’s database that
are deserving of a risk score sooner,
because such businesses are more
popular as global suppliers and
customers.
In addition, the Emerging Market
Mediation Alert (EMMA) score
provides a standard risk indicator
across emerging markets where the
conditions indicating risk may be
different to more developed
economies.
The EMMA Score (Entry Market
Mediation Alert) is based on a scale of
1 to 10 where 1 represents the lowest
risk and 10 the highest risk of default
A one digit number from 0 to 5
assigned to the business based on
information in D&Bss file. The higher
the EMMA class score, the greater the
likelihood that the organization will
have late payments or business
failure.
EMMA Score Application
Low EMMA Score - May proceed to
process the applicant quickly with
minimal or no manual review
depending on the extent of score
validation analysis.
Medium EMMA Score (Medium
Risk Scores). Recommend a
manual review of the applicant
based on the applicant's capacity,
the internal policy and risk
tolerance.
High EMMA Score (High Risk
Scores). Requires thorough manual
review of potential decline, or
approval depending on the
applicant's capacity, the internal
policy and risk tolerance.
AR CREDIT MANAGEMENT 7
The D&B PAYDEX is a unique,
dollar weighted indicator of a
business's payment performance
based on the total number of payment
experiences in D&B's file. The D&B
PAYDEX ranges from 1 to 100, with
higher scores indicating better
payment performance. It reflects the
payment habits of a company,
showing how punctual a company is in
its payments. If a company breaches
payment deadlines, the Paydex index
falls continuously by the number of
days in default.
Payment experiences are gathered by
D&B from suppliers and vendors this
firm does business with. Each
experience reflects a different supplier
and reflects how bills are met within
relation to the terms granted. Up to 875
payment experiences are used to
generate the PAYDEX Score and up to
80 representative payment
experiences are reported in the credit
report.
80-100: Low Risk of late payment
(averages prompt to 30 days within
terms)
50-79: Medium Risk of late payment
(averages 30 or less beyond terms)
0-49: High risk of late payment
(averages 30 to 120 days beyond
terms)
Paydex gives an objective basis to
make decisions on setting credit lines
and terms. Paydex is one of the factors
that come into play in calculating D&B
Scores, which enable predictions on
bad-debt risk.
Suppliers, banks, lessors, landlords,
and customers all use the PAYDEX
for:
Determinate interest rates and
insurance premiums
To decide if an account should be
forwarded for 3rd party collection
Determinate whether to accept a
sale, set terms, or reject an account
PAYDEX
SCORE
8 AR CREDIT MANAGEMENT
D&B RATING
• Financial strength
• Based on Tangible NetWorth from the latestfinancial accounts
2A
• Risk Indicator
• Derived from the DBFailure Score but alsoconsiderate expert rulesand overrides
4
he DB Rating can help
you quickly assess a firm's
size and composite credit
appraisal, based on
information in a company's interim or
fiscal balance sheet and an overall
evaluation of the firm's
creditworthiness
This helps you to drive growth and
increase profitability by:
Allowing automated decisions for
increased efficiency
Enabling more consistent
decisions across the entire
organization
Applying scores across an entire
portfolio to quickly identify risk and
opportunity
Allowing faster processing of large
volumes of transactions
The DB Rating is made up of two parts
and presented in the following format:
T
9 AR CREDIT MANAGEMENT
The US 5A to HH
ratings reflect company
size based on net
worth or equity as
computed by Dun &
Bradstreet. These
ratings are assigned to
businesses that have
supplied Dun &
Bradstreet with current
financial information.
The 1R and 2R ratings
categories reflect
company size based
on the total number of
employees for the
business. They are
assigned to business
files that do not contain
a current financial
statement. For 5A to
HH Ratings, the
Composite Credit
Appraisal is a number
between 1 and 4 that
makes up the second
half of the company's
Rating and reflects an
overall assessment of
creditworthiness. Our
creditworthiness
assessment is based
on both payments and
financial stability. In 1R
and 2R Ratings, the 2,
3, or 4 creditworthiness
indicator is based on
analysis by Dun &
Bradstreet of public
filings, trade payments,
business age and other
important factors. 2 is
the highest Composite
Credit Appraisal a
company not supplying
Dun & Bradstreet with
current financial
information can
receive.
Rating Classification Composite Credit Appraisal
(Based on Worth from Interim or Fiscal Balance Sheet)
High Good Fair Limited
5A $50,000,000 and over 1 2 3 4
4A 10,000,000 to 49,999,999 1 2 3 4
3A 1,000,000 to 9,999,999 1 2 3 4
2A 750,000 to 999,999 1 2 3 4
1A 500,000 to 749,999 1 2 3 4
BA 300,000 to 499,999 1 2 3 4
BB 200,000 to 299,999 1 2 3 4
CB 125,000 to 199,999 1 2 3 4
CC 75,000 to 124,999 1 2 3 4
DC 50,000 to 74,999 1 2 3 4
DD 35,000 to 49,999 1 2 3 4
EE 20,000 to 34,999 1 2 3 4
FF 10,000 to 19,999 1 2 3 4
GG 5,000 to 9,999 1 2 3 4
HH up to 4,999 1 2 3 4
Rating Classification Composite Credit Appraisal
Based on Number of Employees)
Good Fair Limited
1R 10 and over 2 3 4
2R 1 to 9 2 3 4
INV. Indicates that Dun & Bradstreet is
currently conducting an investigation to
gather information for a new report.
DS. Indicates that the information
available does not permit Dun &
Bradstreet to classify the company within
our rating key.
-- (blank). The blank symbol means that
the information available to Dun &
Bradstreet does not permit us to classify
the company within our rating key and that
further enquiry should be made before
reaching a decision. Some reasons for
using a "-" symbol include: deficit net
worth, bankruptcy proceedings, lack of
insufficient payment information, or
incomplete history information.
ER. Certain lines of business do not lend
themselves to classification under the
D&B Rating system. Instead, we assign
these types of businesses an Employee
range symbol based on the number of
people employed.
NQ Not Quoted. This is generally
assigned when a business has been
confirmed as no longer active at the
location, or when D&B is unable to confirm
active operations. Alt
ern
ati
ve
Rati
ngs
AR CREDIT MANAGEMENT
10
Cash flow can either
make or break an
operation. Although
it's obvious that the
most important way
to manage an
organizations' cash
flow is its ability to
collect on open
invoices, managing
which customer
should be extended
what credit and which
should be extended
no credit at all, are
mutually important.
There may be the
unfortunate situation
that you decide to
place an entire account
on credit hold. The
most common situation
though, is the need for
the software to
determine if an order
should be placed on
automatic credit hold.
This would allow the
credit manager time to
investigate whether to
“force” the release of
the order or to contact
the account and notify
them of the situation.
To start, designate a
flag in your customer
master file that will
control whether the
customer should even
be subject to having
their orders placed on
credit hold evaluation.
You may decide to
categorize your best
and most important
customers to never be
placed on an account
hold and having a flag
to control this is very
important.
Next, designate a flag
to control the logic of
placing accounts on
credit hold under one of
the following situations:
Is the account over
their credit limit?
Is the account past
due?
Both
CREDIT HOLD When a customer is consistently late in making
payments, has exceeded their credit limit, or is
identified as a bad risk, you can prevent additional
credit purchases by placing their account on credit
hold. When a customer account is placed on credit
hold, you cannot create new sales orders for that
customer. However, you can still create transactions
for that customer in Receivables.
Managin
g y
our c
ostu
mers’ credit
hold
sit
uation
AR CREDIT MANAGEMENT 11
This means that if the
account is coded as
logic 1, their orders will
be placed on credit
hold if they are over
their credit limit. Logic 2
will place their orders
on hold if they are past
due, and logic 3 if either
one is true.
Next, identify the dollar
amount each one of
your customers will
have as their credit
limit. As orders are
being processed in
your system, have your
system
instantaneously check
the order amount
against the available
credit balance which is
calculated by simply
subtracting the amount
currently due on the
account (accounts
receivable open
amount) from the credit
limit.
It is critical that your
software notify your
staff when orders are
placed on credit hold
and the reason why.
This way your staff can
properly communicate
the situation with the
customer and take
immediate action as
necessary while
properly protecting
your assets.
Once an order is
placed on credit hold, it
immediately appears
on the credit manager
evaluation screen. This
screen should provide
your credit manager
with immediate access
to information that
enables them to make
decisions and take
immediate action.
Armed with all this
information, it is the
credit manager's ability
to either deny the
customer the order or
allow it to go through.
How they chose to do
it, is walking the
balance of protecting
the organizations
assets or building
customers for life.
Managin
g y
our c
ostu
mers’ credit
hold
sit
uation
AR CREDIT MANAGEMENT 12
he credit terms offered to
customers for early payment
need to be sufficiently lucrative
for them to want to pay early, but not
so lucrative that the seller is effectively
paying an inordinately high interest
rate for the use of the money that it is
receiving early.
The term structure used for credit
terms is to first state the number of
days you are giving customers from
the invoice date in which to take
advantage of the early payment credit
terms.
For example, if a customer is
supposed to pay within 10 days
without any discount, the terms are
"net 10 days," whereas if the customer
must pay within 10 days to qualify for
a 2% discount, the terms are "2/10". To
expand upon the last example, if the
customer must pay within 10 days to
obtain a 2% discount, or can make a
normal payment in 30 days, then the
terms are stated as "2/10 net 30".
The concept of credit terms can be
broadened to include the entire
arrangement under which payments
are made, rather than just the terms
associated with early payments. If so,
the following topics are included within
the credit terms:
The amount of credit extended
to the customer
The time period within which
payments must be made by the
customer
Early payment discount terms
The penalty to be charged if
payments are late
T
Credit Terms
Explanation Effective Interest
Net 10 Pay in 10 days None
Net 30 Pay in 30 days None
Net EOM 10
Pay within 10 days of month-end None
1/10 Net 30
Take 1% discount if pay in 10 days, otherwise pay in 30 days
18.2%
2/10 Net 30
Take 2% discount if pay in 10 days, otherwise pay in 30 days
36.7%
1/10 Net 60
Take 1% discount if pay in 10 days, otherwise pay in 60 days
7.3%
2/10 Net 60
Take 2% discount if pay in 10 days, otherwise pay in 60 days
14.7%
CREDIT
TERMS
Credit terms are the payment requirements stated on
an invoice. It is fairly common for sellers to offer early
payment terms to their customers in order to
accelerate the flow of inbound cash. This is especially
common for cash-strapped businesses, or those that
have no backup line of credit to absorb any short-term
cash shortfalls.
AR CREDIT MANAGEMENT
13
You should be aware of the formula for
determining the effective interest rate
that you are offering customers
through your early payment discount
terms. The formula steps are:
1. Calculate the difference
between the payment date for those
taking the early payment discount, and
the date when payment is normally
due, and divide it into 360 days. For
example, under 2/10 net 30 terms, use
this number to annualize the interest
rate calculated in the next step.
2. Subtract the discount
percentage from 100% and divide the
result into the discount percentage.
For example, under 2/10 net 30 terms,
you would divide 2% by 98% to arrive
at 0.0204. This is the interest rate
being offered through the credit terms.
3. Multiply the result of both
calculations together to obtain the
annualized interest rate. To conclude
the example, you would multiply 18 by
0.0204 to arrive at an effective
annualized interest rate of 36.72%.
Thus, the full calculation for the cost of
credit is:
Discount %
(1-Discount %) x
360
(Payment days-Discount days)
Cost of Credit
AR CREDIT MANAGEMENT 14
ankruptcy; to start talking
about this financial state
we first going to define the
word. A legal proceeding involving a
person or business that is unable to
repay outstanding debts. The
bankruptcy process begins with a
petition filed by the debtor (most
common) or on behalf of creditors (less
common). All of the debtor's assets are
measured and evaluated, whereupon
the assets are used to repay a portion
of outstanding debt.
Bankruptcy offers an individual or
business a chance to start fresh by
forgiving debts that simply can't be
paid while offering creditors a chance
to obtain some measure of repayment
based on what assets are available.
Bankruptcy filings in the United States
can fall under one of several chapters
of the Bankruptcy Code, such as
Chapter 7, Chapter 11 and Chapter 13.
Chapter 7 bankruptcy is a liquidation
proceeding in which the debtor's non-
exempt assets, if any, are sold by the
Chapter 7 trustee and the proceeds
distributed to creditors according to the
priorities established in the Code. The
case is begun by filing the official
petition, schedules and statement of
financial affairs. These forms prompt
you to list all of your assets and all of
your debts, along with some recent
financial history. This is the most
important and most time consuming
part of a bankruptcy filing. It is
important that every creditor is listed in
the schedules with an
accurate mailing address.
You must list all of your
debts, even if the debt is
non dischargeable or if you
intend to reaffirm the debt.
The schedules also list your
property, any debts secured
by that property, and the
B
Bankruptcy? Which exit to
choose?
BANKRUPTCY
15
sale value of the property. "Property"
here means "assets" or "possessions",
not just real estate.
Chapter 7 bankruptcy protection
allows debtors to get rid of most of their
debts and start over with a clean slate.
But it also has its drawbacks, including
the loss of property and a depressed
consumer credit score.
Chapter 11 is a form of bankruptcy
that involves a reorganization of a
debtor's business affairs and assets. It
is generally filed by corporations which
require time to restructure their debts.
Chapter 11 is an option of bankruptcy
for small business. Generally, small
businesses shy away from Chapter 11,
because it is expensive, risky, time-
consuming, and complex. Chapter 11
is the only bankruptcy option,
however, for a small business seeking
to restructure and continue in
operation if it is owned by a
partnership, limited liability company,
or corporation. Chapter 11 is also the
only bankruptcy option for individual
business debtors who want to
reorganize but owe too much money to
meet Chapter 13’s eligibility
requirements.
Under Chapter 11, a debtor can
restructure its finances through a plan
of reorganization approved by the
bankruptcy court. By reducing
obligations and modifying payment
terms, a Chapter 11 plan can help a
debtor balance its income and
BANKRUPTCY 16
expenses, regain profitability, and
continue in operation. Under Chapter
11, a debtor also can sell some or all
of its assets so it can downsize its
business if necessary or pay down
claims that it owes.
Another type of bankruptcy option is
Chapter 13. Chapter 13 can be a
restructuring option for small
businesses owned and operated by
individuals (that is, sole
proprietorships). Only individuals may
file Chapter 13, so it is not an option for
businesses operated through
partnerships, limited liability
companies, or corporations. Chapter
13 eligibility is also subject to debt
limits. Currently, an individual cannot
file Chapter 13 if he or she owes more
than $383,175 in unsecured debt or
$1,149,525 in secured debt.
A U.S. bankruptcy proceeding in which
the debtor undertakes a reorganization
of his or her finances under the
supervision and approval of the courts.
As part of the
reorganization, the debtor
must submit and follow
through with a plan to repay
outstanding creditors within
three to five years. In most
circumstances, the
repayment plan must
provide a substantial
payback to creditors - at
least equal to what they
would receive under other
forms of bankruptcy - and it must, if
needed, use 100% of the debtor's
income for repayment. Chapter 13
bankruptcy differs from the outright
foreclosure of an individual's or
business's assets (seen in Chapter 7
bankruptcy) and the expensive and
complicated restructuring of debts
seen in Chapter 11 bankruptcy.
Essentially, Chapter 13 allows a debt-
laden person or sole proprietorship
that still has significant income to
submit an orderly plan to the courts to
BANKRUPTCY 17
pay back debts over a few years.
Doing so can provide advantages to
the debtor not found in other forms of
bankruptcy, such as preventing the
foreclosure of a residence.
The options for bankruptcy that we
been analyzing are just valid for USA,
in the case of México there is a law
called Ley de Concursos Mercantiles
which is the one in charge of the
bankruptcy in this country. A case
under the LCM may be commenced by
(i) the debtor, (ii) a creditor or (iii) the
Attorney General (Ministerio Público).
Under the LCM, a debtor is deemed to
have "generally defaulted on its
payment obligations" if: (1) a payment
default has occurred with respect to
the claims of at least two creditors; (2)
payments are past due for more than
30 days and represent 35% or more of
all the debtor's payment obligations as
of the date of the filing; and/or (3) the
debtor does not have liquid assets
(e.g., cash deposits, short-term
securities, and accounts receivable) to
may at least 80% of the obligations
past due as of the date of the filing.
Under the LCM, eligibility is presumed
when the debtor does not have
sufficient assets to attach after a
default, there are no persons with
authority present, or where the court
determines that the debtor is
fraudulently conveying its assets to
avoid the payment of obligations.
In general, foreign companies may not
be subject to bankruptcy proceedings
in Mexico. The LCM, however, does
allow for the reorganization of
branches and subsidiaries of foreign
companies.
The LCM also permits the recognition
of foreign proceedings under "Titulo
XII," which like Chapter 15 of the U.S.
Bankruptcy Code is based on the
UNCITRAL Model Law on Cross-
Border Insolvency. Indeed, Mexico
was one of the first countries to adopt
the Model Law.
BANKRUPTCY 18
In collaboration with the Ministry of Finance and Public Credit, we have
prepared an informative article to learn more about this organization.
What is
CONDUSEF?
According to the
Secretariat of Finance and
Public Credit, the
CONDUSEF is dedicated to two types of
actions:
Preventive (guide, inform, promote financial
education) and Corrective (handle and resolve
complaints and claims by users of financial
services and products).
The CONDUSEF is committed to promoting
Financial Literacy among the population,
continue with the development of products
and tools to support, advise and guide users
of financial services, Always seek a fair and
equitable relationship between users and
financial institutions.
How to claim financial and
banking services?
On more than one occasion we go to the bank
and left with the same questions that we
walked in or even more and some additional
problem. At such times, it is normal to feel
unhappy and we have to redo queue so that we
again meet us and probably will again leave
unanswered again.
That is why there is the National Commission
for the Protection and Defense of Users of
Financial Services (CONDUSEF), which aims to
ensure the defense of the rights of banking
users as consumers.
MEXICAN FINANCIAL SYSTEM 19
Although the Condusef is an organ of defense,
the entity also controls sofoles, sofomes,
credit information companies, brokerage firms
and exchange,
investment and
savings, credit
unions,
insurance,
bonding and
Afore, among
other.
What can be claimed in
CONDUSEF?
The CONDUSEF answers questions related to
all types of financial products and services
commercialized in the country, but it is
remarkable that only handled claims on
product characteristics, the shape of the
operation, on the treatment of employees and
commitments the parts.
You can claim credit and debit cards, free of
commission, commission checks with
insufficient funds checks, as well as auto
insurance, medical expenses and life.
What cannot be claimed at
CONDUSEF?
In no way conflicts are handled due to the
costs involved in hiring a product or service,
as well as those relating to the interest rate.
Nor can claim matters relating to internal
policies of banks, provided they are not too
hardened.
How to make a claim on the
CONDUSEF?
There are numerous ways to contact the
CONDUSEF. It can be done through the Call
Centre (CAT) to the number 01800999 8080, toll
free from anywhere in the country for
information, advice and even initiate a
complaint or to 53,400,999, for the Federal
District and metropolitan area with the same
functions.
It can also be made by email to the email
[email protected] or Headquarters
You can also make claims in the 32 regional
offices and three existing metropolitan
throughout Mexico.
What should be a claim to
the CONDUSEF?
Complaints to the National Commission for the
Protection and Defense of Financial Services
Users should indicate the name and registered
representative claimant or person, provided it
is a legal person or minor.
You must also enter a description of the
service that is requested and a brief statement
of the facts underlying the claim.
It is also essential that the letter provided the
name of the financial institution with which the
claim is made.
A copy of the documents certifying the reason
for the claim must always be attached.
Otherwise, CONDUSEF may reject your claim
as unfounded.
The claim is approved, it could arrive a
'Settlement Hearing "so we can solve your
problem with the financial institution.
MEXICAN FINANCIAL SYSTEM 20
“Our central bank”
The Bank of Mexico is our central bank and helps the financial system
of our country to develop healthily. The financial system is a set of institutions like banks, investment
companies, insurance companies, sofoles, brokerages, and other
more. These financial institutions facilitate the access of people and
businesses payment systems, ie, checks, credit cards and debit cards,
wire transfers and any other system through transfers which it was
money.
Imagine the amount of money paid
through the system payment within three
business days equal everything
produced in the country on a year. For a financial system works well it
is necessary that the payment systems are safe and efficient.
Located in the Mexico City, was founded on August 25, 1975 by then
President of our country, Mr. Plutarco Elias Calles and its main
objective is to achieve stability in the purchasing power of the national
currency.
The Bank of Mexico is the only institution that
can issue national currency for all transactions
in our economy are made.
Mexico is one of the few countries that
manufacture their own notes and coins. For
that there is the Banknote Factory and the
House of Currency.
The Bank of Mexico makes sure you have the
money needed to cover all needs without any
inflation; ie that prices of goods and services
no increase to the point where we can buy less
with the same amount of money. Care price
stability is one of the most important
responsibilities Bank of Mexico. A series of
measures that this institution applies anti-
inflation is called monetary policy.
The Bank of Mexico is not a commercial bank,
so that neither individuals, nor businesses can
open an account at the central bank.
As only grants loans to commercial banks is
said to be a bank of banks.
The Bank of Mexico, like most central banks
around the world, It is autonomous. This
means that the government cannot intervene
directly on how it is handled. This autonomy
prevents, for example, any authority to order
the bank to pay money or even issuing more
money than desirable
Bank of Mexico considers it important to
improve public understanding of what is and
what makes central banking in our country, in
particular regarding their action aimed at
maintaining price stability, ensure the healthy
development of the financial system, ensure
smooth operation of payment systems and
provide a means of secure and reliable
exchange so that people can realize their
economic transactions.
BANCO DE MEXICO INFORMATIVE ARTICLE
21 MEXICAN FINANCIAL SYSTEM
To a great extent, combating inflation has been
possible thanks to the institutional
foundations of the Central Bank.
There are 3 fundamental elements. The first
has to do with the primary objective of Bank of
Mexico, established by the Constitution, is to
ensure stability purchasing power of the
currency. This command leaves no doubts
about the basic orientation of the tasks of the
Bank of Mexico.
A second foundation is that, also by
constitutional provision, The Bank of Mexico is
autonomous in the exercise of their functions
and their administration. A third institutional
pillar is increasing transparency in the conduct
of monetary policy. Like any public body, the
Bank of Mexico is held accountable for the
performance of their duties. Furthermore, the
exercise of its powers and, in particular, the
determination of monetary policy, requires a
clear external communication.
To this effect, the Bank of Mexico produces
and disseminates statistics and research
papers. It also issues to meet requirements its
role as regulator. In terms of its objective
priority, the law obliges him to submit to the
Executive and the Legislative one statement on
monetary policy at the beginning of each year,
a report each semester on its implementation.
Moreover, since 1995 the Bank of Mexico
publishes its statement Weekly, which among
other things contains the level of the reserve
international as well as the main accounts of
its balance sheet, whose movements allow
knowing their market operations to meet
demand for money from the public. Since 2000
the Bank of Mexico reports a quarterly report
that explains the evolution of inflation and the
foundations of monetary policy
It must be remembered that central banks do
not determine prices, but these are the result
of the interaction of businesses and
consumers in the markets of different goods
and services. However, when the general level
of prices registered inflation continued growth
exists. Ultimately, inflation is a monetary
phenomenon, which corresponds to the
Central Bank guide expectations and price
formation in the economy through their actions
to control.
Since 2001 the Bank of Mexico formally applies
a strategy based on inflation targeting, which
means that monetary policy is "anchor" the
commitment of the Central Bank to apply its
tools to achieve the stated objectives. In the
monetary program that year the Bank of
Mexico established that the annual inflation
target is three percent from December 2003.
This rate is consistent with price stability, once
considered the upward bias indices
corresponding, which do not consider aspects
such as increases in product quality and
changes in consumption patterns.
How the Bank of Mexico seeks
to control inflation?
During the recent decade, Mexico
has made significant progress in
22
MEXICAN FINANCIAL SYSTEM 21
The target of three percent represents an
ongoing commitment. However, a variability
interval of plus or minus one percentage point
around this target is included, in order to
incorporate temporary deviations from factors
outside the scope of monetary policy, such as
highly volatile price fluctuations.
Since 2008 the Bank of Mexico expresses its
monetary policy stance using a benchmark
interest rate, which currently is the rate of
interbank overnight interest. With the changes
in this rate it seeks to influence on public
expectations and, through this and other
channels on the future inflation trends.
We know that the effects of monetary policy
occur with long and variable lags, so that
decisions in this area should be based
primarily on forecasts of the future and
therefore be preventive. The problem is that
nobody knows the future and therefore the
transmission channels of monetary policy may
have an uncertain impact.
Therefore, central banks take into account all
available information. Seek to identify inflation
pressures and nature are trying to distinguish
whether temporary or permanent, whether they
come from pressures of supply or aggregate
demand, and at what stage of the cycle the
economy is.
MEXICAN FINANCIAL SYSTEM 23
exico's only securities
market, the Mexican
Stock Exchange (in
Spanish, la Bolsa Mexicana de
Valores, or BMV) has its
headquarters in Mexico City.
Established in 1886 as the Mexican
Mercantile Exchange, it adopted its
current name in 1975 and is the
second-largest stock exchange in
Latin America (after Brazil). Its
trading system is fully electronic,
and its main index is the IPC.
The BMV is a private financial
entity, operating by concession
ofthe Secretariat of Finance and
Public Credit (Mexico) (SHCP by its
initials in Spanish), under Mexico's
Securities' Market Law, passed in
1933 with the creation of the
modern Mexican Stock Exchange.
The main purpose of the BMV is to
facilitate share transactions and to
push market development,
expansion, and competitiveness.
The BMV was officially
founded in its modern form
in 1933 along with the
passing of the Regulatory
Decree of the General Law of
Credit Institutions and
Auxiliary Organizations,
which deals on matters
relative to the trade of
securities within the country.
On August 26, 2014, BMV
became the 12th stock
exchange to join the United
Nations Sustainable Stock
Exchanges initiative.
M
Mexican Stock Exchange
MEXICAN FINANCIAL SYSTEM 24
The types of securities exchanged through the
BMV include stocks, debentures, government and
corporate bonds, warrants and other derivatives. Shares of initial public
offerings can be made available through the BMV. The Mexican Stock
Exchange's roles include facilitating securities trading, making securities
information available to the general public, promoting fair market practices,
ensuring transparency and contributing to the growth of jobs and the
economy in Mexico.
SECURITY
Most important companies
ST
RU
CT
UR
E
BMV is now a public company following its IPO in June 2008, and its shares are traded on the
BMV equities market. It operates by concession of the Secretariat of Finance and Public
Credit. Until its IPO BMV was owned by its members, which were a group of banks and
brokerage firms. The exchange trades debt instruments including Federal Treasury
certificates (CETES), Federal Government Development bonds (BONDES), and Investment Unit
bonds (UDIBONOS), Bankers acceptances, and promissory notes with yield payable at
maturity, commercial paper and development bank bonds. In addition, it also trades stocks,
debentures, mutual fund shares, and warrants. Trading is conducted electronically through
the BMV-SENTRA Equities System.
MEXICAN FINANCIAL SYSTEM 25
t's a Mexican
financial company
specialized in
managing and
investing the savings
for retirement and
voluntary safely,
millions of workers
affiliated to the
Mexican Social
Security Institute
(IMSS). Seeking the
best possible
performance during
the investment cycle
of resources.
Previously the
pension resources
workers affiliated to
the IMSS, were
administered by such
institution in one joint
account without
obtaining yields.
Subsequently the
AFORE (Retirement
Funds Administrators)
were created by the
Social Security Act
(LSS) in May 1996,
starting its operation
in 1997 with the aim
of providing personal
accounts of workers
and the savings
generated throughout
his working life, could
grow with the returns
generated.
Its operation is
authorized by the
Ministry of Finance
and Public Credit and
supervised by the
CONSAR (National
Commission System
Retirement Savings).
Since July 1997, the
AFORES manage the
savings of the IMSS
workers. From August
2005, offer their
services to all
Mexicans.
The salary he
receives is deducted
an amount which,
together with other
amount that your
employer contributes
and provides other
amount than the
government, a
savings fund (which is
their individual
accounts), which put it
to work is formed (as
invest) from day one
and will generate a
return to the worker.
Thus, gradually grows
saving for the future.
I
AFORE
HO
W D
OE
S IT
WO
RK
?
MEXICAN FINANCIAL SYSTEM 26
Providing information
material on the (SAR)
system.
Having a Specialized
Unit for Public
Attention to address
complaints and
grievances.
Perform resource
transfers SAR 92-97
to your individual
account.
Provide at least 2
statements annually.
Have an Investment
Company
Specialized in
Retirement Funds
(SIEFORE) through
which workers may
get better returns on
their savings and with
very little risk.
Through it the Afore
can receive and
process total and
partial withdrawals.
Keep track of the
resources for your
housing subaccount.
BENEFITS
1. You can improve the lives of retirees
2. Increase domestic savings
3. Increase productive investment
SIEFORE
The Siefore is the instrument by which the Afore invests
resources in the individual account of the worker to earn
higher returns. Siefores are supervised by CONSAR.
Your retirement savings will be deposited in the Siefore
that apply to you according to your age.
OT
HE
R F
UN
CIO
NS
MEXICAN FINANCIAL SYSTEM 27
In this comparative table are demonstrated the marketable securities of a specific type of bank:
Bancomer
MARKETABLE
SECURITIES
Marketable securities are very liquid as they
tend to have maturities of less than one year. Furthermore, the
rate at which these securities can be bought or sold has little
effect on their prices.
Examples of marketable securities include commercial paper,
banker's acceptances, Treasury bills and other money market
instruments.
MEXICAN FINANCIAL SYSTEM 28
Here, are represented the different interest in a short term debt till 1 year and
the different types of marketable securities that the bank has. Also, are settled
the minimum investments that the marketable securities has to contain.
LIBOR TIIE
1. LIBOR (London Interbank Offered Rate) is
the average interbank interest rate at
which a selection of banks on the London
money market are prepared to lend to one
another
2. LIBOR comes in 8 maturities (from
overnight to 12 months) and in 5 different
currencies. The official LIBOR interest
rates are announced once per working day
at around 11:45 a.m. In the past, the
BBA/ICE published LIBOR rates for 5
more currencies (Swedish krona, Danish
krone, Canadian dollar, Australian dollar
and New Zealand dollar) and 8 more
maturities (2 weeks, 4, 5, 7, 8, 9, 10 and
11 months).
3. LIBOR is watched closely by both
professionals and private individuals
because the LIBOR interest rate is used
as a base rate (benchmark) by banks and
other financial institutions
4. Rises and falls in the LIBOR interest rates
can therefore have consequences for the
interest rates on all sorts of banking
products such as savings accounts,
mortgages and loans
1. The TIIE (Tasa de Interés
Interbancaria de Equilibrio) is a
representative rate credit
transactions between banks.
2. The TIIE is calculated daily (for
periods 28, 91 and 182 days) by the
Banco de Mexico with quotes
submitted by banks through a
mechanism designed to reflect
conditions in the money market in
local currency.
3. The TIIE is used as a reference for
various instruments and financial
services such as credit card
products.
4. The interbank equilibrium interest
rate (TIIE) is determined by the
Bank of Mexico based on quotations
submitted by lending institutions,
with a start date of publication in the
Official Journal of the Federation.
5. TIIE is the parameter most
commonly used for daily operations
and loans as well as equity
placements, among other
operations.
LIBOR vs. TIIE
MEXICAN FINANCIAL SYSTEM 29
América
Saraí
Arreaga
Garza 1580926
Ruth Paola Meza Arredondo 1589305
Through the elaboration of this magazine we’ve discovering very important things about a matter
that is to crucial in business life which is finances. Some of the important topics that we discuss
here are important not just to business but also to daily life because besides as topics as the
different types of bankruptcy, that you can be when your business are not doing well in order to
can terminate your debts in the best way, we analyze some important financial institution of this
country named Mexico, some of them created to boost the whole Mexican economy as the Bolsa
Mexicana de Valores but others as the AFORE created to help the actual society and its economy
for its retirement to can have a better pension, another of this institutions is the CONDUSEF which
one of its objectives is to teach people about the importance of personal finance and the saving.
In this project we also discover important thing to enterprises like the D&B which work like a data
base for companies in order to reach its goals by making links between enterprises and scoring
them.
We also review how important are the financial ratios and the credit terms which are very important
for the companies because as we know a lot of what an enterprise buys is or would be in credit
for safety and because managing great quantities on cash is worthless for the companies.
Personally I think this is a very good work that can help the readers to learn in a more dynamic
way because we see a variety of topics that are related with each other.
"Take your business further" as we decided to name this magazine addresses the most important topics in
financial terms such as the financial ratios which are helpful to learn how to analyze the current financial situation
of any organization through these methods with the different types of ratios that the financial manager can use to
interpret the terms; also we found out that Dun & Bradstreet, an american network, is one of the most important
keys involved in the improvement of us economy by registering the credit situations of potential clients of any
business by divided them according to their credit score using the EMMA and PAYDEX score; it is important to
mention that also they rate their potential clients so they can know if the client is going to be able to pay the credit
on time or not. In this way they can prevent any financial risk and also determine which clients are better to keep
it on constant credit or if they are in the bad credit side to hold the credit according to its characteristics. Besides
of being a network, this is also a company that provides commercial information, the credit terms in which a
company can authorize the credit for the customers. Also, the magazine includes different chapters that we have
seen on class; and finally, at the end of the magazine we integrated the organizations and institutions involved in
the Mexican financial system emphasizing in practical information to understand in a better way how Finance is
being involved in the Mexican economy.
Nowadays, not only big and international known companies should have knowledge about the topics that I
mentioned above, but also PYMES in Mexico; the new entrepreneurs seem to have lack of knowledge about
some financial issues and that is why this magazine was created for, in this way we can promote the reader to
being interested in how Finance is going within our country so we can take advantage of any opportunity and
apply all the concepts and topics to our professional activities on a daily basis.
Financial magazines are helpful to any reader and specifically to the businessman as well
as the entrepreneur to take business decisions according to what is best for the company
involved. As we all know, businesses need to manage their capital and investments through
different methods and activities related to financial issues, the key to success is by analyzing
the options and opportunities to determine the optimum decision to take in order to maximize
the company's efficiency.
30
Jessica M.
Ramirez
Gomez 1591768
Lizeth Garza Gonzalez 1580866
In this project we integrate important topics covered during the semester. It was a very interactive way, we collect all the information and gave the form of a magazine.
We cover the issue of financial ratios which are explained where each of them and to use them, include a practical example for better understanding.
Then we followed with the subject of AR Credit Management which is the process of controlling and collecting payments from customer; as subtopic we talked about Dun and Bradstreet Credibility Corp which is the indispensable source of content; information-management expertise and business insight that customers need to make more informed decisions and build profitable relationships. Continue with this subtopic, we included the EMMA Score, Paydex, DB rating, credit holds and credit firms.
Moving with the next subject included in our magazine, we needed to talk about the Mexican Financial System, in here we included the informative articles about the CONDUSEF and the Bank of Mexico, also the AFORES and the Mexican Stock Exchange, as part of this subject we included the marketable securities as some examples of marketable securities include commercial paper, banker's acceptances, Treasury bills and other money market instruments, we made a chart explaining a little about how these works, also we compared the London Interbanck Offered Rate and the Tasa de Interes Interbancaria de Equilibrio, which works similar but the first is made and calculated in the UK and the second is smaller and is calculated in Mexico.
In conclusion, we tried to put in this project a summary of what’s was learned and saw through the forth semester in finance. We hope that you find this information useful.
The first one talks about the different types of Financial Ratios. What are their meaning, their application in a concise situation and an example of one of each to know what are their formulas and how they can be applied to have a financial perspective not only in practical exercises but their application in a corporation; having the financial ratios we can have an idea how much profitability a company has and give us a view of an time-tested analysis of it.
The next section includes the Accounts Receivable Management. This part of the magazine is about an analysis of “D&B (Dun & Bradsreet)” of a company. This concept provides commercial information to those areas of the company that are involved in the management of the company, the credit that they manage, the purchasing sections and the marketing of it. It talks about the importance of the “D&B” and the huge impact of it between the different international companies, There are included it rating and the interpretation of it. We talked about the credit hold and the steps that a customer has to follow to save as much money as they can and how to manage it.
In the third section we talked about the Bankruptcy in the financial analysis and the processes followed to avoid it. The types of bankruptcies and how it affects to the business, which one we can chose in order to not affect the company.
And in the final section of the financial magazine we talked about the Mexican Financial System. In general, there are included subjects like which is the financial system of Mexico, its economy and corporations that supports its finances.
Having a better perspective of the financial management and the economy and the financing systems applied in the real world made us understand better its results and impact in the economy, in the lives of the citizens and the importance of the general knowledge of it.
Also, we learned how to apply the different information and concepts that we saw in the class, which was even more interesting.
This final Financing Project consists in the elaboration of a financial magazine including different subjects that we learned in class. The purpose of this is to know how to apply the concepts seen in real life and having a bigger perspective of the financial analysis. The magazine is composed in 4 sections.
31
Viviana de
la Garza
Gutiérrez
1582002
Adrian Roberto Reyna Flores 1592397
Throughout the investigation that we realized in order to accomplish this magazine, we were able
to identify four main subjects of the finances that are very important to know, in order to be always
informed. Those four subjects were Financial Ratios, A.R Credit Management, Bankruptcy and
Mexican Financial System. These four subjects are primordial in the administration of a business,
because it is practically sure that at some time, they will happen inside the activities or plans of
the company.
In the research that we did as a team, we were able to investigate various important topics
on finance. Through this magazine, we have been able to explore the financial
opportunities, advantages and management strategies that can help us as an important
fact in our decision making in our lives. Really this magazine helps me to understand and
also expand my point of view of some financial subjects in every company.
In this magazine we develop on four important topics in finances; first we investigate more
about the financial ratios and is a useful tool for users of financial statement. One of its
advantages is that simplifies the financial statements and also helps in comparing
companies of different size with each other.
Then we investigate about the A.R. credit management that has so many subjects and
it’s divided by some credit hold and terms. After that we investigate about the bankruptcy,
is when the company know if the business there can work in a good way or that in some
moment the business will go down and literary broke.
And the last topic was the investigation about the Mexican stock exchange and the bank
of Mexico, that play an important role on Mexican economy, because the main function
is the establishment of a center for investment and relationship between savers and
investors looking to put their money to get an interesting performance and businesses
that need capital to invest in developing their businesses.
In the Financial Ratios, we were able to know that are the main methods to analyze a business. If a company
puts in practice the financial ratios, the financial statements will be simplified. Another advantage of the use of
financial ratios is that, for example, with the solvency ratio, a company can know the financial health and the
viability.
In the A.R Credit Management first, we investigate about the creation of the D&B(Dun & Bradstreet) that is a
company that provides commercial information to the areas of credit, marketing, purchasing and collection
management. This company provides data and it has plenty methods to help business in their status of the
companies. Some of those are the emma score, paydex and the DB rating. These support the decision making
day by day of businesses.
In the Bankruptcy, we were able to understand the process of how it works, how it starts, what problem
represents to the businesses with debts and the way those businesses can start again with no more debts.
And in the final subject that was the Mexican Financial System we summarize how the Finances work in Mexico.
We discover that the institutions of AFORE and Bolsa Mexicana de Valores are the main institutions that support
the Mexican economy.
From my point of view, the fulfillment of this financial magazine was important to us, because the topics that we
investigate are primordial in the world of the finance and in all the companies are present and if we can learn
since know what strategies to use, what methods to follow, in a future we won’t have problems to understand
it.
32
REFERENCES 1) Stanley & Geoffrey. Foundations of Financial Management. (11 ed.)
2) http://www.dnb.co.uk/solutions/risk-management-solutions/bad-credit-rating
3) http://www.forbes.com/sites/oracle/2015/03/27/dun-bradstreet-differentiates-itself-using-
data-and-customer-relationships/
4) https://developer.dnb.com/docs/2.0/assessment/3.0/emma
5) http://www.dbhun.hu/en/db-database/db-paydex
6) https://mycredit.dnb.com/glossaries/paydex-score/
7) http://www.dnb.com/company/our-data.html
8) http://www.dnb.co.uk/scores-data/dandb-rating
9) http://www.cbsoftware.com/cbnn/managing_your_customers_credit_hold_situation.php
10) http://www.accountingcoach.com/accounts-receivable-and-bad-debts-
expense/explanation/2
11) http://bankruptcy.findlaw.com/chapter-7.html
12) http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspx
13) http://www.chadbourne.com/files/Publication/acd0a6ce-0f40-4524-b065-
838e7e4c6cd5/Presentation/PublicationAttachment/e1660b75-8ce4-42e2-a88f-
8b0d1d1f5cdc/Mexican%20Bankruptcy%20Law%20Guide.pdf
14) http://tiie.com.mx/tiie-2015/
15) http://www.global-rates.com/interest-rates/libor/libor.asp
16) http://www.economia.com.mx/las_afore_y_su_funcionamiento.htm
17) http://www.condusef.gob.mx/index.php/instituciones-financieras/afore/3-comparativo-
siefores
18) http://www.amafore.org/%C2%BFc%C3%B3mo-funcionan-las-afores
19) http://www.profeco.gob.mx/encuesta/brujula/bruj_2013/bol248_Lo_que_debes_saber_s
obre_afores.asp
20) http://www.stockexchange.com.mx/
21) http://www.redalyc.org/pdf/267/26700822.pdf
22) http://www.wikinvest.com/wiki/Mexican_Stock_Exchange
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