Posts by: Guest 1| Wall St. Training

AFM Enhancements: Diluted Shares Oustanding figure
Hi there, Wouldn't be more accurate to calculate the "Implied Price per Share" by using the "Intrinsic value" from our valuation model as an input to the MAX function to calculate the potential dilution through the Treasury Stock method? And if I want to consider our "intrinsic value", how can I ... Read More

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by Guest 1.

added 12 years ago

Core Model DCF - terminal cashflow
Why are you taking the EBIT as the terminal cashflow in your calculation of TV using he perpetuity method. I would have taken the final year Unlevered Free Cash Flow. Please clarify

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by Guest 1.

added 12 years ago

Credit Statistics
Hi there, A few months ago I took WST's financial modeling courses and I remember that in the "Advanced Financial Modeling - Enhancements" module there was a credit statistics tab where you have a Standard & Poors table with credit ratings based on certain leverage and coverage ratios... Read More

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by Guest 1.

added 12 years ago

Package 3 - Advanced Financial Modeling - DCF analysis quest
I'm working on Package 3, Enhancement to the Core Model Part I - DCF. The DCF analysis is for 5 years, with 2006 being time = 1 (1st year). Also, the NPV function assumes cash flows happen at the end of the year - so 12/31/2006. So if I'm running a NPV function on the 5 years of forecasted unlevere... Read More

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by Guest 1.

added 12 years ago

Re: M&A Debt Sweep CF Recapture Feature
ah I understand now. Thank you!

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by Guest 1.

added 12 years ago

Tax-effected EBIT vs EBITDA for DCF terminal value
Full Question: Why did we use the tax-effected EBIT instead of EBITDA when calculating the terminal value using the perpetuity growth rate? Is this the standard in the business? Also, if we have the growth rate, can we calculate the EBITDA multiple using the following formula: (1+growth rate)/(WACC... Read More

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by Guest 1.

added 12 years ago

Questions on basic Accretion/Dilution model
1. Goodwill: since GW is not amortised whatever the case I was a little confused that you use the terminology of GW amortisation. The US 338 election may allow a tax credit amortisation but I remain confused here slightly. If there is no GW amortisation allowed anywhere in the world then you should ... 1. Goodwill: since GW is not amortised whatever the case I was a little confused that you use the terminology of GW amortisation. The US 338 election may allow a tax credit amortisation but I remain confused here slightly. If there is no GW amortisation allowed anywhere in the world then you should not have it in anywhere the models...its confusing.

- GW is not amortised except for asset deal or any step up to FMV (is this a simple asset revaluation?). In an asset deal all we have is straight up depreciation of new asset acquired as part of Capex. This is not GW amortisation so should not be referred to as such?
- s338: no change re GW amortisation which is not allowed in the P&L but you get a tax credit for GW amortisation even though GW is NOT amortised? I think from a terminology perspective it is clearer to call it a s338 tax credit rather than a GW Amortisation Credit since GW itself remains NOT amortiseable.

2. Target PE and analysis of when a deal will be accretive and dilutive - your explanation of merging Company A with Company B

100% stock deal: lower target PE is accretive because $1 of earnings buys more share value, thus you need less of your dollars to buy a target share value hence it will be earnings accretive. Is this the right intepretation of your explanation? I justify it slightly differently which I think is the same thing: lower target PE will be accretive since it generates more earnings per its share price (has a lower PE). Hence if I combine it with my PE which generates less earnings per my share price (has a higher PE) then the combined PE will be lower to the original acquirors PE meaning the combined entity will require less earnings to generate the combined share price i.e. will be earnings accretive. Do you agree? The "break even" PE in this case is equal to the acquirors PE.

100% cash deal: "break even" PE has to equal 1/post tax cost of debt used to finance the deal (assuming no own cash utilised for the deal). Of course if the target PE is lower than that "break even" PE then it will accrete combined earnings versus the acquiror and vice versa as above. I like this test - what is the theoretical/mathematical justifcation behind it? Read More

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by Guest 1.

added 12 years ago

M&A Cash Purchase Question
Often times we hear on the headlines, Company A is buying Company B for $X in CASH. My question is that are they really using the cash on their balance sheet to make this purchase? I think I may have heard somewhere that when companies use "cash" they are really using a bank loan to make... Read More

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by Guest 1.

added 12 years ago

Incorporating maintenance capex into free cash flow calc
Full Question: I took your "Corporate Valuation Methodologies" class and was impressed with the quality of the class and hope to take more in the future. I am struggling to find a valuation procedure that I'm comfortable with. The denominator should be EV. The appropriate numerator, in my view, ... Read More

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by Guest 1.

added 12 years ago

Urgent: Automating Scorecard Metrics grading
Dear WST, Can you please advise a way to automate the following scorecard metrics grading? Metrics: Target Market Growth Rate [b:2de2qnsf]Metrics Points[/b:2de2qnsf] >20% 12 10%-20% 8 <10% 4 The market growth can range from negative 100% to 1000%,... Read More

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by Guest 1.

added 12 years ago