- •Abstract
- •1. Introduction
- •1.1. Background
- •1.2. Problem and research questions
- •1.3. Aim and Limitation
- •1.4. Outline of thesis
- •1.5. Abbreviation and definition
- •Irr Internal Rate of Return
- •2. Method
- •2.1. Approach
- •2.2. Data collection method
- •2.3. Primary data
- •2.4. Secondary data
- •2.5. Data processing
- •2.6. Validity, reliability and generalization
- •3. Theories
- •3.1. Principal-Agent Problems
- •3.2. Wacc and opportunity cost of capital
- •3.3. Capm and apt
- •3.4. Estimating β
- •3.4.1. Operating leverage and β
- •3.5. The risk and discount rates for international projects
- •3.6. Purposes of performance measurement
- •3.6.1. Eva, Book roi, and ep
- •3.7. Working capital, depreciation and tax
- •4. Own research
- •4.1. Review of pharmaceutical market in Russia
- •3.1.1. Russian companies and them place in market
- •3.1.2. Pharmaceutical company “Zdorovie Ludi”
- •3.2. Research strategy (Roadmap of decision)
- •3.3. International and European contracts
- •3.4. National contracting in a global economy
- •3.5. National contract low and human rights
- •3.6. (Step 1) Juristic analyses and common mistakes of the contract
- •3.6.1. The formation and scope of a contract:
- •3.6.2. The content of a contract:
- •3.6.3. Policing a contract:
- •3.6.4. Performance, discharge and breach of the contract:
- •3.7. (Step 2) Controlling of strategy and consideration the contract as investment project
- •3.8. Transformation the contract to the invest project
- •Risk of delivery (for buyer)
- •Techniques of payment (risk for buyer)
- •3.9. (Step3) Forecast of outflow and inflow
- •3.10. (Step 4) Determination the risk and discount rate
- •3.10.1. Country risk analysis
- •3.11. Commercial counterparty risk analysis
- •3.12. (Step 5) Procedure of estimation and comparison of the contract
- •3.13. Book Rate of Return (Advantages and disadvantages)
- •3.14. Payback Period and Discounted-Payback Period (Advantages and disadvantages)
- •3.15. Internal (or discounted-cash-flow) rate of return (irr) and mirr (Advantages and disadvantages)
- •3.15.1. Lending or borrowing position
- •3.15.2. Multiple rates of returns
- •3.15.3. Mutually exclusive projects
- •3.16. The cost of capital for near-term and distant cash flows
- •3.17. Profitability Index (pi, advantages and disadvantages)
- •3.18. Net Present Value (npv, advantages and disadvantages)
- •3.18.1 Calculate npv with glance of inflation
- •3.18.2 Calculating npv in other countries and currencies
- •3.19. (Step 6) Performance and agency problems
- •4. Results
- •4.1. Simulation model analysis and calculation
- •4.2.1. Wacc as discount rate
- •4.2.2. Manager’s working capital use penalty points
- •4.2.3. Risk-Adjusted Discount Rate (radr) and ceq
- •4.3. Summary of Simulation model analysis
- •4.4. Scenario analysis and calculation
- •4.4.1. Discount rates that based on wacc
- •4.4.2. Discount rates that based on radr
- •4.5. Summary of scenario analysis
- •4.6. Final analysis and Decision Card (Step 7)
- •Decision Card
- •4.7. What could be improved and suggestion for future research.
- •Conclusion
- •References
- •Appendix 1 – 7 (Simulation Model and Scenario analysis calculation) (Excel) Appendix 1 (Excel)
- •Appendix 2 (Excel)
- •Appendix 3 (Excel)
- •Appendix 4 (Excel)
- •Appendix 5 (Excel)
- •Appendix 6 (Excel)
- •Appendix 7 (Excel)
- •Appendix 8 (Interview questions and structure of survey) part 1
- •A) Survey for managers
- •B) Survey for specialist
- •Part 2 Survey of experts
- •Part 3 Results and Conclusion a) Survey for managers
- •Conclusion
- •B) Survey for specialist
- •Conclusion
- •C) Survey of experts
Techniques of payment (risk for buyer)
1. |
Cash-in-Advance |
0 |
+ |
+ |
+ |
+ |
+ |
+ |
+ |
+ |
+ |
(0.9) |
maximum risk |
2. |
Letter of Credit |
0 |
0 |
0 |
0 |
0 |
+ |
+ |
+ |
+ |
+ |
|
|
3. |
Documentary Collection |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
+ |
+ |
+ |
|
|
4. |
Open Account |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
+ |
(0.1) |
minimum risk |
5. |
Special terms of Payment:
|
no estimation |
Figure 2.4
Cash-in-Advance - The buyer pays the seller before shipment of goods. Thus the buyer has a disadvantages he has not assurance to receive the goods or resave it proper time and he is tying up his capital before receipt of goods.
Letter of credit (Documentary credit) - L/C is widely used as financial instrument, because the risks between both parties are equal. L/C is defined by international laws and it secures full and punctual payment. They are some kind of terms in L/C transaction:
revocable or irrevocable
confirmed or unconfirmed
transferable
payable
red clause
green clause
Back-to-back.
Documentary collection – D/C instrument for settlement in national and international trade, all rules about D/C are carried out, and treated according international law. The D/C is having tow types: The first is D/P – Document against Payment Collection. The exporter ships the goods and gives the document to his bank, which will forward the document to the importer’s bank, along with instruction on how to collect the money from importer. The second is D/A – Document against Acceptance Collection. The exporter extends credit to the importer by using a time draft. The documents are released to the importer to claim the goods upon his signed acceptance of the time draft.
Open account – it is the method of payment the least risky for buyer, because buyer receive the goods than his is to pay for has already received goods.
I do not pay attention for the `Special terms of payment, because I do my research as the financing techniques for short-term and medium-term period. In the end, then I use special term of payment I use lot of special dates which is difficult transform in our future model.
The managers of corporation have to answer for two financial questions: What investments should the firm make? And how should it pay for those investments? The first question involves spending money; the second involves raising it. The main target of financial management, when they choose the project, is to increase value of firm. On the other hand, if managers are speaking about contracting they have the same indication as invest projects in the contracting. The first manager invests or spends money; the second manager has profit and it increase value of corporation. After several transformations and same assumptions I may understand the cross-border contract as invest project and I try to use methods investment decision for the contract.
Figure 2.5