Posts by: Guest 1| Wall St. Training

Modeling out pension expenses on the cash flow statement
Full Question: I am building an IFRS full model on a UK company at the moment and need to ask soemthing regarding the Cash Flow statement. Would you include payments to the Company Pension Fund as a negative item in calculations for the Cash Flow from Operations ? It seems many of the sell side rep... Read More

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by Guest 1.

added 11 years ago

Complex Trading Comps: Stock comp transition under 123(R)
Why didn't we include an adjustment for the stock comp charge upon transition to FAS 123(R)? F-28 states that compensation cost for 2005 includes $32 million ($20 million after tax) of costs related to the changes required by the adoption of 123(R). If we aren't adjusting for general non-cash st... Read More

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by Guest 1.

added 11 years ago

Valuing a negative EPS and EBIT company
I'm currently valuing a company that is generating negative EPS for the next five years and at the same time generating negative tax effected EBIT. If I simply took the advanced financial model on WMT built by Hamilton in the video, using the DCF tab, I stick in a 6/7x EV/EBITDA multiple gives me a... Read More

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by Guest 1.

added 11 years ago

How to determine reasonable debt covenants for an LBO deal?
Full Question:
How do you determine reasonable debt covenants for an LBO deal

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by Guest 1.

added 11 years ago

Re: Estimated Taxes
A saw a sort of rule of thumb while on-line --- in order to determine actual cash taxes (as in the actual amount paid to the government). The reason why I have been asking about this is that, cash taxes are very commonly used in a the FCF calculation in my field that usually goes as follows: (E... A saw a sort of rule of thumb while on-line --- in order to determine actual cash taxes (as in the actual amount paid to the government).

The reason why I have been asking about this is that, cash taxes are very commonly used in a the FCF calculation in my field that usually goes as follows: (EBITDA)-(INTEREST)-(CAPX)-(Change in WORKING CAPITAL)-(CASH TAXES) - (OTHER) = FCF

Their approach below is to......Start with book taxes from the income statement. From there, either add the year over year increase in the company's deferred income tax liability (or subtract increase in the company's deferred tax asset) ... etc...

Anyway, here is the actual blurb.......

"How Do We Calculate a Company's Cash Taxes?"

Advanced Approach. In this approach, we make a number of detailed adjustments.

1. Book taxes. We start with a company's income tax provision found on the income statement.

2. Change in deferred taxes. Next, we add the year-to-year increase in a company's deferred income tax liability (or subtract the increase in a company's deferred tax asset). These line items can be found on a company's balance sheet. However, sometimes, this liability is not separately broken out. In those cases, there are two alternate sources for a company's change in deferred taxes:

"Adjustments to reconcile net income to net cash provided by operating activities" in the "Cash flows from operating activities" section of the Cash Flow Statement. A deferred tax liability occurs when a company pays less in cash taxes than it reports in book taxes. Thus, an increase in a company's deferred tax liability represents a source of cash. Conversely, a deferred tax asset occurs when a company pays more in cash taxes than it reports in book taxes. Thus, an increase in a company's deferred tax asset represents a use of cash.

The Income Taxes section of the Notes to the Consolidated Financial Statements, where the 10-K will list the "components of the provision for income taxes". We subtract the sum of the annual U.S. and Foreign deferred income taxes from a company's income tax provision. When annual U.S. and foreign deferred taxes are positive, the company has increased its net deferred tax liability, which reduces the tax onus. Conversely, when annual U.S. and foreign deferred taxes are negative, the company has increased its net deferred tax asset, which increases the tax onus. (Note: the sum of U.S. and Foreign deferred income taxes should be identical to the number in the Cash Flow Statement.)

Do you agree with this approach or no? Or even partially?

Thanks Read More

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by Guest 1.

added 11 years ago

Finding the depreciation expense form 10K
Hi I am trying to do some financial modelling and was going to input the annual depreciation expense for the past 5 years. By looking at the consolidated income statement in form 10K (see below), the item "depreciation expense" was not stated. Net revenue Cost of sales Gross margin ... Read More

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by Guest 1.

added 11 years ago

Re: Modeling 'Names' used in IB/PE - Question
I would suggest you to start preparing for CFA exam. You can go to www.cfainstitute.org and try to understand the exam structure, curriculum etc. It will take 3 years (minimum 2.5 years) and has 3 levels. You would gain i... Read More

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by Guest 1.

added 11 years ago

What is the rationale for using PIKs in a LBO transaction?
Full Question:
What is the rationale for using PIK instruments in a LBO transaction?

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by Guest 1.

added 11 years ago

Complex Trading Comps Analysis: Convertibles of COSTCO
Why we are not considering the $22 conversion price? I might be confused about the characteristics of convertible bond. Just to make it clear: Isn't it the case that the holder of the convertible bond/note, in case of conversion gives up his/her claim on the face value in exchange of the ... Read More

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by Guest 1.

added 11 years ago

Share Based Compensation Forecast
Just wonder if you can help on my question. how should I deal with share based compensation? as they are non-cash item? I'm trying to forecast for share based compensation for a company, let's say it has option plan A, B, C with strike price at 5, 10, 15. if the stock price is now 11. A and... Read More

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by Guest 1.

added 11 years ago