Posts by: Guest 1
Change in Net Working Capital
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WACC for a Private Equity Firm
Consider that a private equity firm is interested in buying a firm and then exiting in three years time. It's my understanding that, generally, we should be using long-term, 10-yr Treasury bonds in order to gauge risk-free rate. However, in this case since the investment horizon is only 3 years, sh... Read More
Consider that a private equity firm is interested in buying a firm and then exiting in three years time. It's my understanding that, generally, we should be using long-term, 10-yr Treasury bonds in order to gauge risk-free rate. However, in this case since the investment horizon is only 3 years, sh... Read More
Permutation
Is there a function / macro in excel that generates various combination of numbers across different cells? Those set of numbers adding up to a certain sum. This has to do with a Monte Carlo Model I’m doing that seeks to generate the optimal Portfolio Mix for a Fixed Income Portfolio based on key ... Read More
Is there a function / macro in excel that generates various combination of numbers across different cells? Those set of numbers adding up to a certain sum. This has to do with a Monte Carlo Model I’m doing that seeks to generate the optimal Portfolio Mix for a Fixed Income Portfolio based on key ... Read More
Why is there a holding company discount?
Full Question:
Why in equity valuation is given a discount to holding companies? For example, a company like GE.
Full Question:
Why in equity valuation is given a discount to holding companies? For example, a company like GE.
Macro partially disabled
Hi there, I have been using the great macro for a while, but recently I encountered some problem when I switch to another laptop. On this new laptop part of the macro features are disabled, i.e. some work while some don't. This is a Lenovo thinkpad X61 with Windows XP system, what might be the reas... Read More
Hi there, I have been using the great macro for a while, but recently I encountered some problem when I switch to another laptop. On this new laptop part of the macro features are disabled, i.e. some work while some don't. This is a Lenovo thinkpad X61 with Windows XP system, what might be the reas... Read More
How do I treat Deferred Maintenance Revenues in TEV?
Full Question: I have a question regarding how to treat Deferred Maintenance Revenues relating to maintenance fees earned by a company for software licenses in terms of calculating the Equity Value of a Company. Normally, the Equity Value = TEV + Cash less Debt. However, should the Deferred Maintan... Read More
Full Question: I have a question regarding how to treat Deferred Maintenance Revenues relating to maintenance fees earned by a company for software licenses in terms of calculating the Equity Value of a Company. Normally, the Equity Value = TEV + Cash less Debt. However, should the Deferred Maintan... Read More
Advance Financial Modeling- Core Model Questions on CF
Hi, In the Cash Flow Statement, the model included Other assets and Deferred Charges in the changes in working capital calculation. From my other studies, I learnt working captial only included current asset and current liability, however, other assets and deferred charges is under long term asset... Read More
Hi, In the Cash Flow Statement, the model included Other assets and Deferred Charges in the changes in working capital calculation. From my other studies, I learnt working captial only included current asset and current liability, however, other assets and deferred charges is under long term asset... 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
WACC question
If you are a buyer and evaluating a potential target, and now you have the target's standalone Free Cash Flow. For DCF valuation, is it right to apply the buyer's's WACC to the free cash flow, with the logic that the buyer should value how much the cash flow worth to it using its own cost of capital... Read More
If you are a buyer and evaluating a potential target, and now you have the target's standalone Free Cash Flow. For DCF valuation, is it right to apply the buyer's's WACC to the free cash flow, with the logic that the buyer should value how much the cash flow worth to it using its own cost of capital... Read More
Full Question: So the short answer to the question is actually that when companies account for stock-based comp. it is a non-cash charge that should be added back in the CFO area. However, because stock-based comp. must be accounted for by the company as a potential benefit (b/c upon exercise the c... Full Question:
So the short answer to the question is actually that when companies account for stock-based comp. it is a non-cash charge that should be added back in the CFO area. However, because stock-based comp. must be accounted for by the company as a potential benefit (b/c upon exercise the company receives an income tax benefit so they account in the asset side under deferred tax assets) they must account for that benefit on the other side of the equation as well. This happens through retained earnings (NI is reduced by the charge) and there is an add-back (roughly) in paid-in capital. Without the add-back in additional paid-in capital, the model will not balance. Also, when options are exercised, they provide cash which is accounted for through the CFF and occasionally a tax deduction through the CFO. That is what I have found so far. Please let me know if someone at your firm thinks I am right. Read More