Posts by: Guest 1
Please clarify if any value is gained by buying back stock-1
Full Question: It has been said that holding cash isn't necessarily bad for a company. My belief is that the company can repurchase shares, therefore increasing their debt/equity ratios. Higher debt = higher tax shield so the value of the company is greater. Now, theory says, that's not true becaus... Read More
Full Question: It has been said that holding cash isn't necessarily bad for a company. My belief is that the company can repurchase shares, therefore increasing their debt/equity ratios. Higher debt = higher tax shield so the value of the company is greater. Now, theory says, that's not true becaus... Read More
Re: Technology Sector Valuation
I'm most interested in internet search companies, i.e. yahoo, google, bidu, or something similar to this. Does valuation for these types of company pretty straightforward or is there something more unique for these types of models? Thanks
I'm most interested in internet search companies, i.e. yahoo, google, bidu, or something similar to this. Does valuation for these types of company pretty straightforward or is there something more unique for these types of models? Thanks
Re: CLOSING aDJUSTMENT
I don't understand why it is okay to adjust the price based on working capital movement and loans but not on dividends. May be I'm missing something. Also, in case of the working capital and loan adjustment.. can you please elaborate alittle bit on the adjustment formula that should be used. Thank... Read More
I don't understand why it is okay to adjust the price based on working capital movement and loans but not on dividends. May be I'm missing something. Also, in case of the working capital and loan adjustment.. can you please elaborate alittle bit on the adjustment formula that should be used. Thank... Read More
Re: Thoughts after going through package3 (advanced modeling)
Hi, I have taken the advanced and merger modeling courses online. I have the following questions. 1. What is the impact of minority interests (MI) on the DCF valuation if the P&L and BS already factor in the MI? Do I just remove the MI from the firm value to get the equity value? For the WACC, ... Read More
Hi, I have taken the advanced and merger modeling courses online. I have the following questions. 1. What is the impact of minority interests (MI) on the DCF valuation if the P&L and BS already factor in the MI? Do I just remove the MI from the firm value to get the equity value? For the WACC, ... Read More
Re: D&A is different on the I/S and CF, which to use ??
also looking at Wendy's (WEN) 10K, do you model accumulated deficit the same why as retained earnings? and how to model treasury stock on B/S?
also looking at Wendy's (WEN) 10K, do you model accumulated deficit the same why as retained earnings? and how to model treasury stock on B/S?
Please clarify if any value is gained by buying back stock.
Full Question: So I understand your example. But my understanding is that M&M proposition II says that in a world with taxes, increasing debt means increasing the value of the firm or Enterprise Value. In the examples you provided me, the enterprise value of the firm stayed constant. I'm saying... Read More
Full Question: So I understand your example. But my understanding is that M&M proposition II says that in a world with taxes, increasing debt means increasing the value of the firm or Enterprise Value. In the examples you provided me, the enterprise value of the firm stayed constant. I'm saying... Read More
IRR
I am working on a quick and dirty LBO model for a large retail chain. I assumed 20% transaction premium, as well EBITDA and revenue multiples of 6.89x and 1.2x respectively. The actual multiples are 4.4 and 0.77. I have two questions: 1) Are my transaction multiples too high comparatively with the... Read More
I am working on a quick and dirty LBO model for a large retail chain. I assumed 20% transaction premium, as well EBITDA and revenue multiples of 6.89x and 1.2x respectively. The actual multiples are 4.4 and 0.77. I have two questions: 1) Are my transaction multiples too high comparatively with the... Read More
Free Cash Flow to Firm vs. Free Cash Flow to Equity
Full Question: When calculating free cash flow to equity, we adjust the capex+working capital+depreciation numbers so that it represents only the equity portion. That makes sense because the equity shouldn't be responsible for all the cash outflows of the firm. However, when I think about the physi... Read More
Full Question: When calculating free cash flow to equity, we adjust the capex+working capital+depreciation numbers so that it represents only the equity portion. That makes sense because the equity shouldn't be responsible for all the cash outflows of the firm. However, when I think about the physi... Read More
Complex Trading: Diluted s/out for preferred/convertibles?
Hi,
Will there be an explanation regarding getting diluted s/out when there are options, preferreds, and convertibles? How should we calculate these - is there a shortcut formula like the treasury option method? How are warrants related?
Hi,
Will there be an explanation regarding getting diluted s/out when there are options, preferreds, and convertibles? How should we calculate these - is there a shortcut formula like the treasury option method? How are warrants related?
Hi, I have attended your advanced financial and merger modeling course. For minority interests (MI), can you please recap how it impacts the DCF valuation? Are these the correct adjustments/impact if my consolidated P&L and BS factors in MI already? 1. WACC is build up from ratio of debt and e... Hi,
I have attended your advanced financial and merger modeling course.
For minority interests (MI), can you please recap how it impacts the DCF valuation? Are these the correct adjustments/impact if my consolidated P&L and BS factors in MI already?
1. WACC is build up from ratio of debt and equity in the consolidated BS so it factors in the MI already
2. To calculate equity value from firm value, we substract the MI along with the net debt
Any more adjustments required?
On the CF statement, in brief, how does MI affect the CF?
On the period for the DCF calculation, how do you determine whether it should be 5 or 10 years? How do you determine when the terminal value should kick in?
What is the basis for imputing a terminal value? Are there adjustments in the terminal year which can be done to better justify the terminal value e.g. setting depreciation = capex to imply maintenance capex into perpetuity?
Thank you. Read More