[MUSIC] So welcome to the last clip. We made it to the end, right? We're almost at the end of this week. So let me just recap briefly what we just did in this session of today. As you remember what we did is, a brief recap of the last week and then we've been looking basically at the diagnosis and action plan. Diagnosis means, what is the point of the company? And we said that the diagnosis of the company is that NFO is growing faster than working capital. But to be able to understand specifically what that means. We took some time to define what NFO and working capital is. That's what we do these boxes and then we explain what is the definition of each one. And then we moved on to the diagnosis and to the action plan. What is the action plan? Well we should work on the working capital, on the NFO, to be able to close the mouth of that crocodile right? And we understood that the best thing to do would be to raise prices, in this specific case, right? We commented and we said that well, this company's growing too much. And that sometimes companies die out of success in a way. They are growing so much that they are not able to finance their operations, right? Now in this brief recap, I wanted to specifically tell you what have we learned in this internal, in these three sessions. Specifically the last one I mean in general. For the case, Polypanel has been a good case in which we've learned several things. The first one is that we learned and practiced a methodology. So at the beginning, we were faced with a situation in which a company asks for a credit to a bank. There are two different ways of approaching this decision. One, a disordered way in which you start giving answers, questions you do not have an order to analyze that and you don't know exactly what is the intuition or what you should do. The second one is to follow a methodology. You need to make a decision, to be able to make a decision, you need to understand the business. After you have understood the business, you can go to the numbers and you can analyze the P&L and the balance sheet. To be able to know if the company will be able to pay it back, you do a forecast. After doing the forecast and you have all the knowledge, then you could do a diagnosis of the problem, and with the diagnosis, you can develop an action plan. The second thing that we learned over this session is that we have to be aware of the need of funds for operations of the NFO. It is a very important investment, it is a very important part of any balance sheet of a company. Every company invests in fixed assets, but every company has to invest as well, in NFO, which is an important part of the SSI. For some company is a bigger part or more important part then the fixed assets. In the example of Polypanel, fixed asset was just 100, whereas the rest of the company of the SSI, was at almost 1 million, so 90% was basically NFO. Third thing we learned is that NFO always follows the same pattern as sales. If sales grow, NFO grows. If sales decrease, NFO might decrease. Because NFO is receivables plus inventory minus payables and the three components depend on sales. And lastly, we felt like make sure in your company that you make money. It's not enough to sell a lot. That's where you have some tension. Many times you have within a company, have a lot of tension between the finance guy and the marketing guy. The marketing guy will be the one in which for him, or the sales guy, for him selling more and more, it's always good. No matter the way in which you sell more, right? Some sales managers might give better terms to customers without realizing that giving better terms to customers is actually increasing the NFO. And if you increase the NFO, you might not have enough funding to keep running the company. So make sure you make money, make sure you have good gross margin. So with this brief recap, we are done with the session of this week. And next week, what we're going to do is look at different aspects of how NFO and working capital works, for different specific companies, like company that is seasonal, a company that is cyclical, a company that has Negative NFO. And we will talk about small details related to NFO and working capital that can help us understand and run a robust business. So, I hope to see you next week. [MUSIC]
