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... 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 in the Balance Sheet, why do we included this in the change in working capital calculation?

In the Share Repurchase calculation, why do we use Projected EPS in trailing basis? I saw from the other post that it will create circular reference, is it the only reason why we need to use the trailing basis, or are there other reasons?

Thank you. 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... 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?

If this is not the case and the target's own WACC should apply, then does it mean that the DCF valuation using target's WACC is same to all potential buyers? In other word, does the target's free cash flow worth same to different buyers with different WACCs, or costs of capital? Read More

Complex Trading: adj beta vs raw beta on bloomberg
Hi,

In the video, you explained that adj beta = 2/3*raw beta + 1/3 <- (1 * 1/3)

In the bloomberg screenshot for Walmart, however, I see this equation below the box:

ADJ BETA = 10.671 X RAW BETA + 10.331

How does this relate to the original equation you explained?

Thanks

Circular references clarified
Full Question: My model calculated, but I had a question about the final (key) point surrounding the iterations. I understand that we entered a choose function which will alternate using the average cash balances (2) or the beginning value (1). I also understand how to set up and run the iterations... Full Question:
My model calculated, but I had a question about the final (key) point surrounding the iterations. I understand that we entered a choose function which will alternate using the average cash balances (2) or the beginning value (1). I also understand how to set up and run the iterations – my questions were: 1) how the iterations make the model equate such that the diffs are $0. Is it changing anything besides the cash value (I know the choose function was directed towards the type of cash bal to use but I wanted to confirm that nothing else was being modified when going through the iterations 2) when to use the beginning (1) verse the average (2) cash balances. I thought I heard you say that it should be set to the beginning balance initially and than turned to 2 such that it uses the avg balance for the iterations and than turned back to 1 once the iterations are complete and there are no differences remaining in the model… Read More

Complex Trading: Quick cost of debt question
Hi,

This might be a dumb question but I just need to be clarified:

I know that the risk free rate for equity is 10yr Treasury bill. But the cost of debt (before tax) the yield to maturity of what instrument? Is this always the case or when do we use a different instrument?

Thanks