Forum Search: portfolio risk management
Re: Risk Free Rate (what to use)
This is covered extensively in our Finance 101 video. As we are sure you can understand, it would be too cumbersome to explain our entire course's section on this topic in this forum, which is meant for specific questions that are not covered in our courses or for clarifications above and beyond wha... Read More
This is covered extensively in our Finance 101 video. As we are sure you can understand, it would be too cumbersome to explain our entire course's section on this topic in this forum, which is meant for specific questions that are not covered in our courses or for clarifications above and beyond wha... Read More
Implied statement of cash flows vs. actual statement of cash flows
In your class, we entered the historical income statement and balance sheet and then solved for the statement of cash flows. When I've tried this on my own, I've found that my working capital and CFI numbers differ significantly from items found in the company's reported statement of cash flows and ... Read More
In your class, we entered the historical income statement and balance sheet and then solved for the statement of cash flows. When I've tried this on my own, I've found that my working capital and CFI numbers differ significantly from items found in the company's reported statement of cash flows and ... Read More
Target D/E Ratio for WACC
Without asking company management, how do you determine the optimal D/E ratio for the purpose of calculating weights for the WACC?
Without asking company management, how do you determine the optimal D/E ratio for the purpose of calculating weights for the WACC?
Target D/E ratio for WACC
Without having to ask management, how do you determine the optimal D/E (D/A or E/A) ratio for calculating a company's WACC?
Without having to ask management, how do you determine the optimal D/E (D/A or E/A) ratio for calculating a company's WACC?
Re: Restricted Stock Units/Equity Compensation Plans
RSU's are not treated as options because they are (usually) outright grants that will increase shares outstanding 1 for 1, as opposed to options or warrants that have a strike price. Once the RSU is exercisable (vesting period over), then they are added to Basic Shares Outstanding for the purposes o... Read More
RSU's are not treated as options because they are (usually) outright grants that will increase shares outstanding 1 for 1, as opposed to options or warrants that have a strike price. Once the RSU is exercisable (vesting period over), then they are added to Basic Shares Outstanding for the purposes o... Read More
ROE vs Revenue as stock return predictor
Full Question: On the attached exhibit, chart one plots revenue vs. return, and chart two plots ROE vs. return. The questions are: What are the flaws in just using Revenue? My guess: Does not capture expenses or profit margins. What are the virtues of using ROE? My guess: Captures both ma... Read More
Full Question: On the attached exhibit, chart one plots revenue vs. return, and chart two plots ROE vs. return. The questions are: What are the flaws in just using Revenue? My guess: Does not capture expenses or profit margins. What are the virtues of using ROE? My guess: Captures both ma... Read More
How to calculate CAPM for emerging markets?
Full Question: Let’s say you’re valuing a company via DCF and so you need to figure out the target company’s cost of equity via CAPM. You’ve selected your comps, almost all of whom are US-based. But you’ve also got a british comp in there, who is a great comp. let’s further assume that ... Read More
Full Question: Let’s say you’re valuing a company via DCF and so you need to figure out the target company’s cost of equity via CAPM. You’ve selected your comps, almost all of whom are US-based. But you’ve also got a british comp in there, who is a great comp. let’s further assume that ... Read More
RE: How is the WACC - cost of debt affected by a tax benefit?
Recall that WACC and therefore, the cost of debt is based on marginal, incremental borrowing rate. You are always trying to capture a "normalized" run-rate discount rate. The fact that you have NOL's (tax benefit) should be irrelevant because again, one is trying to capture normalized tax rate and t... Read More
Recall that WACC and therefore, the cost of debt is based on marginal, incremental borrowing rate. You are always trying to capture a "normalized" run-rate discount rate. The fact that you have NOL's (tax benefit) should be irrelevant because again, one is trying to capture normalized tax rate and t... Read More
RE: How do you factor net operating losses (NOLs) in valuation?
NOLs are trickier - they are not typically factored directly as an asset with value in the sense of equity, debt and enterprise value, but rather, decreases the cash taxes paid, increasing free cash flow and thereby increasing overall value. Of course, NOLs can be valued separately by modeling out f... Read More
NOLs are trickier - they are not typically factored directly as an asset with value in the sense of equity, debt and enterprise value, but rather, decreases the cash taxes paid, increasing free cash flow and thereby increasing overall value. Of course, NOLs can be valued separately by modeling out f... Read More
Without any additional information, we would suggest you allocate it similar to your allocation for depreciation and CapEx. If those relative percent distributions the same (they should be since CapEx and depreciation are tied together), then you can guesstimate using same % for working capital. Of ... Without any additional information, we would suggest you allocate it similar to your allocation for depreciation and CapEx. If those relative percent distributions the same (they should be since CapEx and depreciation are tied together), then you can guesstimate using same % for working capital. Of course, the risk is that the business units are fundamentally different and the working capital allocation is not similar to CapEx/depreciation, but if you really truly have no information and no other way of obtaining accurate information, then that's the best you can do. Read More