Forum Search: capital markets
Treatment of liabilities on the BS (as debt) in an M&A
Full Question:
In determining a total transaction value for an acquisition (Including the stock/cash offer, plus the assumption of long term liabilities and working capital), would all liabilities from the balance sheet be included?
Full Question:
In determining a total transaction value for an acquisition (Including the stock/cash offer, plus the assumption of long term liabilities and working capital), would all liabilities from the balance sheet be included?
RE: Modeling out working capital
Normally with a derivation of the full balance sheet, yes, assets less laibilities. But 30/60 days expenses is not an uncommon estimate for cash flow based business (services firms) since you need to maintain that to pay salary, etc.
Normally with a derivation of the full balance sheet, yes, assets less laibilities. But 30/60 days expenses is not an uncommon estimate for cash flow based business (services firms) since you need to maintain that to pay salary, etc.
RE: How to calculate CAPM for emerging markets?
easy answer - take our emerging mkts class! seriously though, great question with easy answer - make sure that when you grab the beta from bloomberg that you use S&P 500 as your index as opposed to the default which may be FTSE 100. rationale - as you noted, you DO want to capture country spe... Read More
easy answer - take our emerging mkts class! seriously though, great question with easy answer - make sure that when you grab the beta from bloomberg that you use S&P 500 as your index as opposed to the default which may be FTSE 100. rationale - as you noted, you DO want to capture country spe... Read More
RE: How do I treat Deferred Maintenance Revenues in TEV?
Normally speaking, TEV focuses only on capital structure and "sources of funds". In other words, it focuses on valuation of entities. However, your question focuses on a "working capital", "day-to-day operations" of the company as opposed to capital structure. Thus, without knowing more about the sp... Read More
Normally speaking, TEV focuses only on capital structure and "sources of funds". In other words, it focuses on valuation of entities. However, your question focuses on a "working capital", "day-to-day operations" of the company as opposed to capital structure. Thus, without knowing more about the sp... Read More
RE: Why is there a holding company discount?
Short Answer: Corporate overhead allocation and inefficiencies. Longer Answer: Clearly, conglomerates exist under the context of "economies of scale" (increased purchasing power, lower cost of capital, etc) but there is a cost to coordinating all the activities. "Sum-of-the-parts" valuation many... Read More
Short Answer: Corporate overhead allocation and inefficiencies. Longer Answer: Clearly, conglomerates exist under the context of "economies of scale" (increased purchasing power, lower cost of capital, etc) but there is a cost to coordinating all the activities. "Sum-of-the-parts" valuation many... Read More
RE: How do convertible bonds affect total capitalization?
Yes, the TEV effectively increases as presumably, the post-conversion captial structure has more equity due to dilution. That's on the market value side. On the balance side side, correct, remove converts from debt as before and increase book value by the converted amt (shares * price /share). Howev... Read More
Yes, the TEV effectively increases as presumably, the post-conversion captial structure has more equity due to dilution. That's on the market value side. On the balance side side, correct, remove converts from debt as before and increase book value by the converted amt (shares * price /share). Howev... Read More
RE: How to value a company if we do or don't invest?
The question of current valuation with all known facts is a separate and independent issue from the capital raise in the future. Meaning that they are two disparate, unlinked events. If it is known with certainty that a capital raise two yrs later is to be done (and more importantly, the %age to be ... Read More
The question of current valuation with all known facts is a separate and independent issue from the capital raise in the future. Meaning that they are two disparate, unlinked events. If it is known with certainty that a capital raise two yrs later is to be done (and more importantly, the %age to be ... Read More
RE: Maintenance capex vs capital expenditures revisited
YES! CapEx that is not purely maintenance capex is to be reflected in the Free Cash Flow to Firm calculation! To do is would be remiss and excluding a significant portion of cash that doesn't below to the firm's stakeholders!
YES! CapEx that is not purely maintenance capex is to be reflected in the Free Cash Flow to Firm calculation! To do is would be remiss and excluding a significant portion of cash that doesn't below to the firm's stakeholders!
RE: Do you need to adjust EBITDA for non-cash items?
EBITDA - no adjustment for non-cash, remember it's a proxy for cash flow, not trying to really figure out cash flow. It's supposed to measure core ability to generate cash - if you want true cash flow, I would point to FCFF instead which incorporates Working Capital changes (and obviously CapEx). ... Read More
EBITDA - no adjustment for non-cash, remember it's a proxy for cash flow, not trying to really figure out cash flow. It's supposed to measure core ability to generate cash - if you want true cash flow, I would point to FCFF instead which incorporates Working Capital changes (and obviously CapEx). ... Read More
Full Question:
For change in working capital, you use the change in operating expenses. Normally, and what I’ve been taught, is that you use current assets minus current liabilities. Can you explain to me why you would use the change in operating expenses?