Break out depreciation from cost of goods sold or operating expenses
Hi WST,
I am wondering if we should break out the depreciation expenses from either cost of goods sold or operating expense when preparing for the historical portion of the income statement and make the projection accordingly?

Banks - Key CAMELS Ratio
Can I understand for banks' operating profit, do we commonly take preprovision profit before tax? If so, how do we calculate preprovision profit before tax?   Please correct me if I'm wrong for the PPOP calculations for banks: PPOP = (net interest income + total non interest income - i.e. fee in... Can I understand for banks' operating profit, do we commonly take preprovision profit before tax? If so, how do we calculate preprovision profit before tax?
 
Please correct me if I'm wrong for the PPOP calculations for banks:
PPOP = (net interest income + total non interest income - i.e. fee income) - operating expenses (e.g. staff costs, marketing, rent etc but excludes provisions made) ?
 
And PPOP margin = (net interest income + total non-interest income) - (operating expenses which excludes provisions made) / net interest income + total fee income?

can you please advise, how do we calculate the credit costs of a bank as well?

Separately, wondering if anyone in this banks financial modelling group has a compiled pdf detailing the key CAMELS ratios calculations which we can refer for use when assessing banks?

Thanks! Read More

Depreciation Schedule
Hello, I am having difficult completing the deprecation schedule from the template. Do we assume a useful life for buildings and machinery/equipment to calculate the weighted average useful life of gross PPE? I'm not sure how % accumulated depreciation metric is incorporated or how gross % breakdow... Hello, I am having difficult completing the deprecation schedule from the template. Do we assume a useful life for buildings and machinery/equipment to calculate the weighted average useful life of gross PPE? I'm not sure how % accumulated depreciation metric is incorporated or how gross % breakdown is helpful if Land and CIP is not depreciated. Read More

Historical Cash & Equivalent Reconciliation
Hi WST, I have a somehow stupid question. I realized that we only make projection in the cash flow statement without bothering with the historical cash flow items. I kind of tried to use the same approach in cash flow statement to calculate the historical Cash & Equivalent to see if they would mat... Hi WST, I have a somehow stupid question. I realized that we only make projection in the cash flow statement without bothering with the historical cash flow items. I kind of tried to use the same approach in cash flow statement to calculate the historical Cash & Equivalent to see if they would match; however, the cash & cash equivalent that I get in the cash flow statement never reconcile with the reported cash & cash equivalent. My question is should we try to reconcile the historical cash flow items if not why not? Thanks. Read More

Over Estimating Depreciation
Hi WST, Quick question: if we can't have the residual value of a company's depreciate assets; does that mean we could very well over estimate the depreciation expense? Ex. A company has $1000 of machinery and Equipment at the beginning of the period and with 3 years of life. However, without kno... Hi WST,
Quick question: if we can't have the residual value of a company's depreciate assets; does that mean we could very well over estimate the depreciation expense? Ex. A company has $1000 of machinery and Equipment at the beginning of the period and with 3 years of life. However, without knowing that the residual value of the asset would be, let's say, $200 which leaves us $800 worth of depreciation over 3 years. Now, without knowing what the residual value would be we would have to depreciate the full $1000 for the life of the asset. Is this correct? Many thanks. Read More