Forum Search: capital markets
Re: par value
In the context of paid-in capital (stock), par value is an arbitrary number determining a baseline value of each share (typically determined by the company). You can return to about the 5-minute mark in the video for a recap. Also, somewhat similarly, in the context of bonds, par value refers to ... Read More
In the context of paid-in capital (stock), par value is an arbitrary number determining a baseline value of each share (typically determined by the company). You can return to about the 5-minute mark in the video for a recap. Also, somewhat similarly, in the context of bonds, par value refers to ... Read More
Re: No Growth Model and Gordon Growth Model
You're trying to calculate intrinsic value via growth models. So the difference between current price and that future intrinsic value is your capital gains.
You're trying to calculate intrinsic value via growth models. So the difference between current price and that future intrinsic value is your capital gains.
No Growth Model and Gordon Growth Model
Hi there,
Why is it that capital gains are not mentioned in the equations for the Gordon Growth Model and No Growth Model?
Thanks!
Hi there,
Why is it that capital gains are not mentioned in the equations for the Gordon Growth Model and No Growth Model?
Thanks!
Re: Overview of the Financial Markets
Wealth Management, while not as directly related to the markets as some other functions, could be considered very similar to the Asset Management side. For instance, WM comprises a substantial portion of demand for securities such as stocks, whether they're individual companies or sectors. Their cli... Read More
Wealth Management, while not as directly related to the markets as some other functions, could be considered very similar to the Asset Management side. For instance, WM comprises a substantial portion of demand for securities such as stocks, whether they're individual companies or sectors. Their cli... Read More
Overview of the Financial Markets
How does Wealth Management fit into the big picture of the financial markets?
How does Wealth Management fit into the big picture of the financial markets?
Re: capital lease in TEV
We would exclude capital leases from TEV calculations in vast majority of cases. Nuances are explained in the Private Company Valuation and Valuation Nuances course - so don't leave those exceptions out! In the cases of excluding capital leases from TEV, EBITDA does not need to be further adjuste... Read More
We would exclude capital leases from TEV calculations in vast majority of cases. Nuances are explained in the Private Company Valuation and Valuation Nuances course - so don't leave those exceptions out! In the cases of excluding capital leases from TEV, EBITDA does not need to be further adjuste... Read More
Re: Questions on the slides (8 questions)
Hi Thank you for the reply, they are very helpful! Hope you had a good weekend! Wanted to follow up your response to 7a-c, if I understand you correctly, 1. Lever & unlever of beta of comps and calculating of tax effected cost of debt: a. use marginal tax rate instead of effective tax... Read More
Hi Thank you for the reply, they are very helpful! Hope you had a good weekend! Wanted to follow up your response to 7a-c, if I understand you correctly, 1. Lever & unlever of beta of comps and calculating of tax effected cost of debt: a. use marginal tax rate instead of effective tax... Read More
Re: Questions on the slides (8 questions)
1) Yes, include kp because it is part of funding costs of capital structure 2) Preferred typically is more expensive than debt and less than equity; in terms of valuation, treat it like debt, subtracting it out of TEV to arrive at equity. Throw in value of any converts or warrants for all-in return... Read More
1) Yes, include kp because it is part of funding costs of capital structure 2) Preferred typically is more expensive than debt and less than equity; in terms of valuation, treat it like debt, subtracting it out of TEV to arrive at equity. Throw in value of any converts or warrants for all-in return... Read More
Questions on the slides (8 questions)
1. Do you always have to include cost of preferred equity in WACC? In which case you MUST include cost of preferred equity? 2. Since preferred equity is closer to debt, does that mean cost of debt < cost of preferred equity < cost of equity? How do you calculate the returns and valuation multiple... Read More
1. Do you always have to include cost of preferred equity in WACC? In which case you MUST include cost of preferred equity? 2. Since preferred equity is closer to debt, does that mean cost of debt < cost of preferred equity < cost of equity? How do you calculate the returns and valuation multiple... Read More
Hi can you shed light in which case is shareholder reported as debt vs equity (capital contribution) on the balance sheet in GAAP and IFRS? From what I understand it's classified as debt at least under IFRS. I am not as familiar with GAAP. In reference to points 1 and 2 below. 1. https://www.... Hi can you shed light in which case is shareholder reported as debt vs equity (capital contribution) on the balance sheet in GAAP and IFRS? From what I understand it's classified as debt at least under IFRS. I am not as familiar with GAAP. In reference to points 1 and 2 below.
1. https://www.sdmayer.com/insights/blogs/audit-assurance/classify-shareholder-advances/
The link (GAAP) indicates that depending on the terms of shareholder loan, it can be classified as either debt or equity. Can you please explain what to look out for in the financial disclosure of publicly listed companies to discern whether it's classified as debt or equity?
2. I was reading this case on Enron (out of curiosity), https://www.econcrises.org/2016/12/07/enron-corporation-2001/ and it seems that depending on the terms of the shareholder loan, it may be seen as a debt from bank's perspective but seen as equity by the company, meaning companies can abuse the terms to manipulate the capital structure.
Excerpt:
The General Partner and Limited Partner in Chewco were SPE’s also created by Enron called Big River and Little River, respectively. So, Big River and Little River each borrowed $11.5 million from Barclays (for a combined $23 million). The documents governing these loans to Big River and Little River closely resemble promissory notes and loan agreements. Nevertheless, they were labeled “certificates” and “funding agreements” rather than simply being called “loans.” In fact, instead of requiring Big River and Little River to pay interest to Barclays, the Big River and Little River SPE’s were required to pay “yield” at a specified percentage rate (Powers Report, 2002). If you think that sounds an awful lot like an interest rate, that’s because, for all intents and purposes, it was. In other words, the money capitalizing the general and limited partners of Chewco only met the 3% requirement for equity contribution by deceptive paperwork regarding the debt Read More