Re: Advance Financial Modeling- Core Model Questions on CF
Generally speaking, you will go with the company's classification of working capital, as they know best what is inside each line item. This can clearly be ascertained by looking at their CFO on the Cash Flow Statement to see where they placed the items. THey are usually grouped together with some so... Generally speaking, you will go with the company's classification of working capital, as they know best what is inside each line item. This can clearly be ascertained by looking at their CFO on the Cash Flow Statement to see where they placed the items. THey are usually grouped together with some sort of indentation or heading within CFO to indicate Working Capital.

For Share Repurchases, using trailing EPS to guesstimate future stock price that the company buys back their stock at is fair - just use LTM (last twelve months) PE multiple to calculate Implied Stock Price. Read More

Re: WACC : Historical Beta Values
Q1) Bloomberg should be able to handle that easily. Go to Ticker <EQUITY> Beta and you can customize date range and periodicity. Most other financial database vendors should also be able to handle. Q2) it's really not that hard. Our online course, Advanced Financial Modeling - Enhancements to... Q1) Bloomberg should be able to handle that easily. Go to Ticker <EQUITY> Beta and you can customize date range and periodicity. Most other financial database vendors should also be able to handle.

Q2) it's really not that hard. Our online course, Advanced Financial Modeling - Enhancements to the Core Model and/or Complex Trading Comps course provides the template. You would need to use existing capital structure to lever and unlever and decide if any preferreds are tax deductible or not. As such, we don't recommend automating everything. This is why you get paid the big bucks! Read More

Re: Capitalizing vs Expensing Interest
I think I understand. So what you're saying is that in any given fiscal period, the cash flow may not be the same for both scenarios (capitalize and expense) but in the lifetime, so to speak, of the interest the cash flows will ultimately be the same.

Re: Capitalizing vs Expensing Interest
[quote="wsthost":2xqvvb6q]the offsetting entries would be deferred taxes. remember, the sum of expensing (interest expense) and capitalization (interest + depreciation) must be all the same at the end. so, how it's allocated in the interim years is irrelevant as long as they all add up. [b... [quote="wsthost":2xqvvb6q]the offsetting entries would be deferred taxes.
remember, the sum of expensing (interest expense) and capitalization (interest + depreciation) must be all the same at the end. so, how it's allocated in the interim years is irrelevant as long as they all add up. [b:2xqvvb6q]taxes are paid based on cash revenue and expenses and thus, deferred taxes are created to balance everything, [/b:2xqvvb6q]such that the final cash $ out each year remains constant. hence, the cash flow statement is the great equalizer, since no matter what accounting methods are used, the cash flow is always the SAME![/quote:2xqvvb6q]

Sorry for the confusion, but is there any way you can numerically demonstrate how deferred taxes play into this? I would like to fully understand how this works since Dean Choi does not mention deferred taxes in this part of the lecture so it is a bit foreign to me. Are you saying that taxes are affected by revenues and expenses that occur with actual cash exchange, whereas taxes affected by revenues and expenses that are non-cash (e.g. depreciation) are rolled into a deferred tax category? Read More

Re: Capitalizing vs Expensing Interest
Yes, correct. Taxes paid are always based on revenues and expenses recognized by the IRS. Deferred taxes will reconcile the difference between the tax treatment and the accounting treatment. Since some companies elect to be a cash basis taxpayer and others accrual basis taxpayers, it is not possi... Yes, correct.
Taxes paid are always based on revenues and expenses recognized by the IRS. Deferred taxes will reconcile the difference between the tax treatment and the accounting treatment. Since some companies elect to be a cash basis taxpayer and others accrual basis taxpayers, it is not possible to generalize on this. However, the cash flow statement will always reflect the actual cash taxes paid and the deferred tax item will always appear as an add back or deduction from net income. Read More