1)Does financial leverage (debt) have any impact on the Free Cash Flow,

on the cash flow to shareholders, on the growth of the company and on the value of the shares?

 

2) Is it true that very few Spanish mutual funds outperform their  benchmark? it strange?

 

3) What is the significance and the utility of the following formula: Ke=DIV (1+g) p+g?

 

4) What is the market risk premium in Spain at the present moment -the number which I have to use in the valuations?

 

5) Is the difference between the market value of the shares (capitalization) and their

book value a good measure for the value creation in a company since its foundation?

 

6) Is it better to buy shares of accompany or its assets?

 

7) Does the expected value of the sales and of the net income of Spanish companies have anything to do with sustainable growth?

 

8) Is PER a good guide to investments?

 

9) Is there and optional capital structure? What is it and how can it be calculated?

 

10) Is there any relationship between the net income and the flow to shareholders?

1. Debt has no influence on free cash flow because this is , by definition, the flow to shares if the company has no debt. However, the equity flow does depend on the debt . however , the equity flowdoe depend on the debt . this also affect the capitalization and the value of ashares. If accompany increase its debt, its capitalization decrease and , naturall, the price per share increase .
2. Yes. During the period 1998- 2007, only 30 of the 935 mutual funds with over 10 years of history obtained a higher return than the benchmarkused; and just two of them obtained ahigher return than the overall index of the Madrid stock exchange. D1998-2007 and 1992 -2007, the average return on mutual funds were lower  than the returns on the state bonds( at any term considered) . During the past 10 years, the average returns of the funds was lower than inflation.Despite these results , at 31^st December 2007,8,264 ,240 shareholders had 238.7 euros billion invested in the 2907 existing investment funds.
3. The expression Ke = DIV (1+g) / p +g comes from the Gordon and Shapiro formula to value shares: p= DIV(1+g) /(ke-g ). In these formulas , P and DIV are known and ke and g are unknown. Some people take as g ( expected groth of dividends) the average of expectation of analysts, and afterwards  they calculate ke (ke calculated ibn such way is usually called implicit). But ke calculated in this way is just one  of several which can be calculated .the formula allows us to obtain pairs (ke, g) which satisfy the equation.

Step-by-step explanation

1. Debt has no influence on free cash flow because this is , by definition, the flow to shares if the company has no debt. However, the equity flow does depend on the debt. however, the equity flow doe depends on the debt. this also affects the capitalization and the value of shares. If accompany increase its debt, its capitalization decrease and, naturally, the price per share increase. 
2. Yes. During the period 1998- 2007, only 30 of the 935 mutual funds with over 10 years of history obtained a higher return than the benchmark used; and just two of them obtained a higher return than the overall index of the Madrid stock exchange. D1998-2007 and 1992 -2007, the average return on mutual funds were lower than the returns on the state bonds( at any term considered) . During the past 10 years, the average returns of the funds was lower than inflation. Despite these results, at 31^st December 2007,8,264,240 shareholders had 238.7 euros billion invested in the 2907 existing investment funds.
3. The expression Ke = DIV (1+g) / p +g comes from the Gordon and Shapiro formula to value shares: p= DIV(1+g) /(ke-g ). In these formulas, P and DIV are known and ke and g are unknown. Some people take as g ( expected growth of dividends) the average of expectation of analysts, and afterward, they calculate ke (ke calculated ibn such way is usually called implicit). But ke calculated in this way is just one of several which can be calculated .the formula allows us to obtain pairs (ke, g) that satisfy the equation.
4. It is not possible to talk of "the" market premium for Spain. A risk premium is an incremental return an investor demands from shares, above the return on risk-free bonds. There is a market risk premium of each investor, but it is not possible to talk about a market risk premium of the market. In order to be able to talk about a market risk premium of the market, it could be necessary that all investors had the same one. On the other hand, the "risk premium" is used to define four different concepts:the incremental required return above fixed-income, the differential historical return, the expectation of differential return and the implicit market risk premium.
5. No. value creation in period is the difference between the return to shareholder' and the required return multiplied by the capitalization at the begging of the period.
6. The choice between buying shares of a company and buying its assets depends mainly on fiscal differences and on the possible responsibilities related to the value of asset holdings, on penal responsibilities. Which might be different for two parties.
7. No. sustainable growth it is just a number that shows how much a company could grow without any capital increases or debt increase and considering a constant return. On the other hand, an increase in sales or net income depend on the market and on the competition and has little to do with sustainable growth.
8. No. The return to dividends and the relation between capitalization and the book value of shares are better indicators, on average.
9. There is no optimal capital structure. capital structure is a variable that depends on the inclination of high directives and which has a lot of implications on the company: for its daily functioning, for its growth, for its capacity to manage risk and crisis and for its survival. If we consider the optimal structure the one that produces a minimum WACC, then the optimal structure is the one that maximizes debt. 
10. The relationship net income and the available flow to shareholders in a year is the following. CFac=BF0- D+ Evc, where NOF is the increase in working capital requirements, AFN, the increase in the net fixed assets, D, The increase in financial debt  and Evc * the increase in shareholders' Euity  which is not due to profits (reserves, conversion of convertibles...)