Posts by: Guest 1
RE: Levered vs. unlevered beta for cost of equity
With respect to the use of FCFE, I would also normally avoid using it; however, would it make sense in a situation where a company is expecting to fund a substantial capex program with debt financing and use anticipated cash flows to pay it down quickly?
With respect to the use of FCFE, I would also normally avoid using it; however, would it make sense in a situation where a company is expecting to fund a substantial capex program with debt financing and use anticipated cash flows to pay it down quickly?
Corporate Valuation: capital lease
Hi About the capital lease, the instructor mentioned in the lecture, his view of capital lease is not very positive, it shows more debt, less efficient for the asset turnover ratios, however, capitalized also means future depreciation, you can get the tax deduction for the capital lease, perhaps ... Read More
Hi About the capital lease, the instructor mentioned in the lecture, his view of capital lease is not very positive, it shows more debt, less efficient for the asset turnover ratios, however, capitalized also means future depreciation, you can get the tax deduction for the capital lease, perhaps ... Read More
Re: WACC : Historical Beta Values
For cost of debt calculations the most widely used practice is to use the credit ratings to assign a credit premium over a risk free rate. which sources are used to get the values of premiums based on the credit ratings?
Is there any subjective analysis involved?
For cost of debt calculations the most widely used practice is to use the credit ratings to assign a credit premium over a risk free rate. which sources are used to get the values of premiums based on the credit ratings?
Is there any subjective analysis involved?
Re: Displaying Color Info
Thank you for always promptly answering my questions. Every time, your advice has steered me in the direction that led to a solution. It's appreciated!
Thank you for always promptly answering my questions. Every time, your advice has steered me in the direction that led to a solution. It's appreciated!
How to calculate / estimate transaction costs for an LBO?
Full Question: I am doing a LBO analysis of a small retailing company. The transaction EV is about $350 million and new equity is $100 (my number). What is the appropriate transaction cost for this analysis? You mentioned that the M&A fee was around 1-2% of TEV. But I am not sure about the lega... Read More
Full Question: I am doing a LBO analysis of a small retailing company. The transaction EV is about $350 million and new equity is $100 (my number). What is the appropriate transaction cost for this analysis? You mentioned that the M&A fee was around 1-2% of TEV. But I am not sure about the lega... Read More
RE: Deferred Acquisition Costs for Life Insurance Companies
Thanks, that's what I thought. Now, if I wanna use the BV multiple, it seems that I need to adjust the BV by the "deferred policy acquisition costs" and/or the "value of insurance purchased," since the amounts are sitting on the balance sheet as an asset. It would only seem to make sense to make t... Read More
Thanks, that's what I thought. Now, if I wanna use the BV multiple, it seems that I need to adjust the BV by the "deferred policy acquisition costs" and/or the "value of insurance purchased," since the amounts are sitting on the balance sheet as an asset. It would only seem to make sense to make t... Read More
How to set up Sources & Uses for <100% LBO?
Full Question: What is the proper way to set up sources and uses for an LBO where the sponsor is acquiring less than 100% of the target? I have typically included lines for roll-over equity in both the S&U in order to get the value of the total equity (rollover and purchased) from the sources t... Read More
Full Question: What is the proper way to set up sources and uses for an LBO where the sponsor is acquiring less than 100% of the target? I have typically included lines for roll-over equity in both the S&U in order to get the value of the total equity (rollover and purchased) from the sources t... Read More
RE: Corporate Valuation: capital lease
Hi, in the valuation methodologies video it is mentioned that capital leases should not be added to debt because they could be considered operating leases. In the previous reply, however, it is mentioned that "rating agnecies always add back leases, both operating and capital". What is the correc... Read More
Hi, in the valuation methodologies video it is mentioned that capital leases should not be added to debt because they could be considered operating leases. In the previous reply, however, it is mentioned that "rating agnecies always add back leases, both operating and capital". What is the correc... Read More
Capitalizing vs Expensing Interest
I am working through the accounting boot camp and have a question regarding the effect on cash flow when interest is capitalized versus expensed. I understand in theory that cash flow is supposedly unchanged in either scenario and that the difference is merely the allocation of the interest (if cap... Read More
I am working through the accounting boot camp and have a question regarding the effect on cash flow when interest is capitalized versus expensed. I understand in theory that cash flow is supposedly unchanged in either scenario and that the difference is merely the allocation of the interest (if cap... Read More
Full Question:
I am looking at the potential LBO of a small insurance company and have a question about how to model the transaction for purchase account purposes under GAAP and statutory accounting. Here are the assumptions: