Economic-financial evaluation of a cement company: Cementos Pacasmayo

Abstract

Purpose: The aim of this paper is to address a company valuation procedure by explaining the steps that must be followed from an economic-fi nancial perspective.Design methodology: We employ the study case methodology to fulfi ll all the procedure stages. Specifi cally, we analyze the Peruvian cement company “Cementos Pacasmayo”. A 10-year discounted cash fl ow (DCF) is presented and brought to present value using a discount rate (WACC) composed by the cost of debt and the cost of capital of thecompany.Findings: We can conclude that the evaluation process should always include the country, industry and company.Practical implications: Our study provides useful implications for management. On the one hand, it is important to highlight the subjectivity to predict some parameters or doing assumptions. On the other hand, it is important to understand and know a good procedure to valuate a company as an insider or a potential investor.Originality value: The proposed model consists of the economic studies of the country, sector and company, which allow the appraiser to specify certain parameters or assumptions for the elaboration of a model that approximates the value of the company.