Forum Search: capital markets
Re: WMT model question
From the perspective of financial analysis, we don't differentiate the difference between redeemable and non-redeemable. This is an accounting related classification that results in whether or not it is slotted into the Equity account (new rules) or if it is not. As such, the point is that the entit... Read More
From the perspective of financial analysis, we don't differentiate the difference between redeemable and non-redeemable. This is an accounting related classification that results in whether or not it is slotted into the Equity account (new rules) or if it is not. As such, the point is that the entit... Read More
A quick question about TEV
In advanced modeling session, Hamilton uses tax-effected EBIT, instead of Free cash flow to firm, to calculate terminal enterprise value (TEV=EBIT(1-tax rate)(1+g)/(WACC-g), but almost all texts use FCFF in numerator). Given EBIT not including capx or working capital, how would this argument be ju... Read More
In advanced modeling session, Hamilton uses tax-effected EBIT, instead of Free cash flow to firm, to calculate terminal enterprise value (TEV=EBIT(1-tax rate)(1+g)/(WACC-g), but almost all texts use FCFF in numerator). Given EBIT not including capx or working capital, how would this argument be ju... Read More
Re: PPE&depreciation schedule
Very astute observation! Yes, you are 100% correct. To go even further, the CIP portion also needs to have capitalized interest to make thoroughly accurate. However, for most companies, this is an immaterial number. Real estate development and REITS, this becomes significant and as such, we need to ... Read More
Very astute observation! Yes, you are 100% correct. To go even further, the CIP portion also needs to have capitalized interest to make thoroughly accurate. However, for most companies, this is an immaterial number. Real estate development and REITS, this becomes significant and as such, we need to ... Read More
Re: A quick question about TEV
Yes, this is covered in our Basic Financial Modeling class when we first introduced DCF. In a nutshell, in the long-run, for a slow growth, mature, stable cash cow, CapEx and Depreciation offset each other over time. If using perpetuity growth method for terminal value, this concept should apply (e... Read More
Yes, this is covered in our Basic Financial Modeling class when we first introduced DCF. In a nutshell, in the long-run, for a slow growth, mature, stable cash cow, CapEx and Depreciation offset each other over time. If using perpetuity growth method for terminal value, this concept should apply (e... Read More
Cash Flow Projection / Capital Structure Change Modeling
which would be the best package for modeling out cash flow projections based on capital structure changes? After completing the advanced modeling module, I know I can just input new tranches of debt with assumed interest rates and flow that to come up with free cash flow projections...but wondering... Read More
which would be the best package for modeling out cash flow projections based on capital structure changes? After completing the advanced modeling module, I know I can just input new tranches of debt with assumed interest rates and flow that to come up with free cash flow projections...but wondering... Read More
Re: Employee Stock Purchase Plan
If the employees have purchased the stock, then yes, the shares would have been issued and as such, are part of Basic Shares Outstanding. Sometimes, firms issue "Restricted Shares" which are part of Diluted Shares Outstanding. If uncertain, your best bet is to view the EPS footnote that ... Read More
If the employees have purchased the stock, then yes, the shares would have been issued and as such, are part of Basic Shares Outstanding. Sometimes, firms issue "Restricted Shares" which are part of Diluted Shares Outstanding. If uncertain, your best bet is to view the EPS footnote that ... Read More
Re: Cash Flow Projection / Capital Structure Change Modeling
The best course would be our Advanced LBO Modeling that contains numerous tranches of debt and is specifically built to handle capital structure changes. Our Distressed model is focused on fulcrum securities and as such, focused on recoveries. The first part of our distressed model does incorporate... Read More
The best course would be our Advanced LBO Modeling that contains numerous tranches of debt and is specifically built to handle capital structure changes. Our Distressed model is focused on fulcrum securities and as such, focused on recoveries. The first part of our distressed model does incorporate... Read More
Re: Ev calc? Inlcude postretirement liab's and pension liab's?
Comps are relevant because you have to see the treatment across board. If all comps have the same problem then you have to go with what the market is treating everyone else at. Short answer: do not include liabilities when calc'ing TEV from stock price Slightly longer answer: when buying the compa... Read More
Comps are relevant because you have to see the treatment across board. If all comps have the same problem then you have to go with what the market is treating everyone else at. Short answer: do not include liabilities when calc'ing TEV from stock price Slightly longer answer: when buying the compa... Read More
Re: Minority Interest To the CF
Yes, we made an assumption that the MI was paid out in cash to the minority interest shareholders. If you would like to alter that assumption and say that the MI was NOT paid out in cash, then you would do the following to make sure you balance: on the BS: increase MI account by the amount of MI not... Read More
Yes, we made an assumption that the MI was paid out in cash to the minority interest shareholders. If you would like to alter that assumption and say that the MI was NOT paid out in cash, then you would do the following to make sure you balance: on the BS: increase MI account by the amount of MI not... Read More
I had a few side/random questions from the accretion dilution analysis. Finance ONLY purchase price equity (& NOT EV), as quick/dirty model/anal? In other words, I would think that financing would FUND EV (if there is debt, that debt would most likely be refinanced/ repaid/retired, or less co... I had a few side/random questions from the accretion dilution analysis.
Finance ONLY purchase price equity (& NOT EV), as quick/dirty model/anal?
In other words, I would think that financing would FUND EV (if there is debt, that debt would most likely be refinanced/ repaid/retired, or less commonly, assumed/rollover), but most accretion dilution analysis I see FUND ONLY the EQUITY OR OFFER VALUE = (target undisturbed price + prem) * target FD shares (is this because the analysis is quick and dirty and not detailed/complexed)?
PF NI (of both stand-alone cos) is probably marginal/PF (not necessarily normalized/cleansed)?
In other words, I would think that NI of buyer + NI of target SHOULD BE normalized but may sometimes contain marginal one-time items for PF EPS purposes?
Side questions:
For tax rate, I'm thinking that it is usually the statutory rate (adjusted for PF/marginal/forecast factors)?
For PF debt interest rate% (depending on which debt tranche is used for financing), I'm thinking that is the blended/average book (footnote) rate (adjusted for PF/marginal/forecast factors/variables)?
It appears that the accretion dilution analysis is an EPS / income statement / non-cash / accrual analysis - as such it seems like it is not entirely relevant as a cash effect/consequence analysis. If so, how relevant is a cash effect/consequence analysis (I'm thinking that it is relevant but less so, and that these metrics are reflected in the PF leverage/capitalization and ownership statistics)?
How relevant is the additional/incremental (tax deductible or not) D&A ex from asset step/write-up? It seems like alot of the PPA % allocation assumptions originate from in-depth accountant analysis/review, and that its hard to plainly make "standard" assumptions for practical modeling purposes.
Fees are arguably one time items. However, I have seen them included in some (probably) detailed analysis. Should they be included (I didn't see that in WST version). In likely a detailed (more full blown / integrated merger) analysis/model, I would think that the non-financing fees would affect the uses (and thus sources) of funds resulting in higher EV and thus financing costs (to fund that higher EV); financing fees would be capitalized in BS and result in additional amortization costs in P&L and thus lower PF EPS. Read More