Forum Search: capital markets
RE: Modeling out pension expenses on the cash flow statement
Recall that pension expense is technically included in Compensation (usually part of SG&A). That does not necessarily mean they physically paid cash for that expense in that time period (matching principle of expenses, subset of accrual accounting). Therefore, the contribution to pension would b... Read More
Recall that pension expense is technically included in Compensation (usually part of SG&A). That does not necessarily mean they physically paid cash for that expense in that time period (matching principle of expenses, subset of accrual accounting). Therefore, the contribution to pension would b... Read More
RE: Inputting scheduled lease payments in the debt sweep
We would decrease capital lease on the balance sheet and put that in the cash flow statement just like working capital. In theory you have to account for imputed interest and depreciation.
We would decrease capital lease on the balance sheet and put that in the cash flow statement just like working capital. In theory you have to account for imputed interest and depreciation.
RE: Forecasting working capital off future quarters' sales?
Your logic isn't a bad one - to base days outstanding off future forecasted quarterly sales. However, you will find that if you do that, you will create circular references. Any difference between using same quarter vs future quarter sales will be minimal unless you are a huge growth company. The ad... Read More
Your logic isn't a bad one - to base days outstanding off future forecasted quarterly sales. However, you will find that if you do that, you will create circular references. Any difference between using same quarter vs future quarter sales will be minimal unless you are a huge growth company. The ad... Read More
RE: LBO Deal Structuring and Capital Lease Treatment Discussions
QUESTION: RE: LBO modeling: when a company you’re analyzing in order to do an LBO has capital leases on its balance sheet, what’s the proper way to reflect that in the sources and uses? That is: let’s assume they have $20mm of capital leases on the balance sheet right now (IE pre transacti... Read More
QUESTION: RE: LBO modeling: when a company you’re analyzing in order to do an LBO has capital leases on its balance sheet, what’s the proper way to reflect that in the sources and uses? That is: let’s assume they have $20mm of capital leases on the balance sheet right now (IE pre transacti... Read More
RE: Modeling out pension expenses on the cash flow statement
Thanks. The company have an item in the working capital section of the CF statement "payment to Pension Fund" of negative GBP100m.
Thanks. The company have an item in the working capital section of the CF statement "payment to Pension Fund" of negative GBP100m.
Treatment of Revolver as Debt for TEV
I wanted to ask your view on a discussion we had here at the firm. The topic was how to calculate the Net Debt of a company for the purpose of subtracting it to the enterprise value and getting to a purchase price. The firm is a small growing company with approximately 1.6m in Accounts Receivabl... Read More
I wanted to ask your view on a discussion we had here at the firm. The topic was how to calculate the Net Debt of a company for the purpose of subtracting it to the enterprise value and getting to a purchase price. The firm is a small growing company with approximately 1.6m in Accounts Receivabl... Read More
Minority Interest in LBO Model
When doing a (UK) PtP LBO Model, I have to include in uses of fund the following (what I am quite sure about): Share Price (latest close) % Premium Offer Price per Share All Shares Outstanding Equity Offer Value =+Debt Refinancing =+Pensions =+Transaction Costs =+Tendering Costs =+... Read More
When doing a (UK) PtP LBO Model, I have to include in uses of fund the following (what I am quite sure about): Share Price (latest close) % Premium Offer Price per Share All Shares Outstanding Equity Offer Value =+Debt Refinancing =+Pensions =+Transaction Costs =+Tendering Costs =+... Read More
Net Debt and Working Capital
Net debt includes all debt - short and long-term less excess cash. The revolver is often an operating line secured by accounts receivable. I have seen analysts calculate net debt as long-term debt net of working capital surplus/deficiency. Is this correct? When I want to use an EBITDA multiple ... Read More
Net debt includes all debt - short and long-term less excess cash. The revolver is often an operating line secured by accounts receivable. I have seen analysts calculate net debt as long-term debt net of working capital surplus/deficiency. Is this correct? When I want to use an EBITDA multiple ... Read More
Correct benchmark for beta
I'm a buy-side equity analyst at a European bank that has an equity portfolio of only euro zone stocks. In my valuation models, namely discounted cash flows, to arrive the WACC of a specific stock I use the Beta of the stock versus a European benchmark (I use Dow Jones Eurostoxx 50 index) with daily... Read More
I'm a buy-side equity analyst at a European bank that has an equity portfolio of only euro zone stocks. In my valuation models, namely discounted cash flows, to arrive the WACC of a specific stock I use the Beta of the stock versus a European benchmark (I use Dow Jones Eurostoxx 50 index) with daily... Read More
You have to remember the core lessons from my valuation class! If nothing else has happened to the company, why should there be a change to the value of the company (enterprise value)? If the "core, recurring profitability from core operations" has not changed, there is no change to TEV. Capital str... You have to remember the core lessons from my valuation class! If nothing else has happened to the company, why should there be a change to the value of the company (enterprise value)? If the "core, recurring profitability from core operations" has not changed, there is no change to TEV. Capital structure changes do not change this as capital structure is a "function" of debt and equity mix, meaning that equity value is a derived number. So if you just altering the capital structure mix, the core value (TEV) stays the same.
Your reference to M&M II seems to be tackling it the other way around - that equity value is the beginning point and u add debt to get TEV which is what we do to calc the current mkt observable TEV but again, that TEV is supposedly fixed if there are no changes to profitability.
This is the same concept of why we always use FCFF and never FCFE because calculating an equity-based number doesn't tell us anything abt the value of the company, but just the equity. Then, once u know TEV, you boil down to derive equity value. Read More