Posts by: Guest 1
Re: Core Model DCF - terminal cashflow
You're not answering my question or rather have not convinced me that your approach is technically correct. What I am saying is that in my view it is not correct to do this when doing a DCF especially when the difference in the terminal year between the tax effected EBIT is so much larger than the ... Read More
You're not answering my question or rather have not convinced me that your approach is technically correct. What I am saying is that in my view it is not correct to do this when doing a DCF especially when the difference in the terminal year between the tax effected EBIT is so much larger than the ... Read More
conditional average
what would be the formula to calculate conditional average, i.e. if conditions a,b, and c are met then average the rows x1:x40? I used average and if functions in an array formula and it did not accept all the conditions. The results displayed were not consistent with pivot table results.
what would be the formula to calculate conditional average, i.e. if conditions a,b, and c are met then average the rows x1:x40? I used average and if functions in an array formula and it did not accept all the conditions. The results displayed were not consistent with pivot table results.
Gain on the disposal of assets, in CFO or CFI on CF?
Hi there, This is a more general accounting question. Recently I have been seeing lots of companies alternate between reporting their gain or loss on the disposal of assets in either CFO or CFI in the cash flow statement, yet, I remember learning that such disposals were typically only in CFI as it... Read More
Hi there, This is a more general accounting question. Recently I have been seeing lots of companies alternate between reporting their gain or loss on the disposal of assets in either CFO or CFI in the cash flow statement, yet, I remember learning that such disposals were typically only in CFI as it... Read More
Leveraged Buyout Overview: about goodwill
hello I am a little unclear about the accounting treatment. You mentioned the goodwill is the difference between the purchase price and the book value. But from my knowledge:if the M & A is viewed prospectively (restate everything and look forward) by treating the transaction as a purchase. ... Read More
hello I am a little unclear about the accounting treatment. You mentioned the goodwill is the difference between the purchase price and the book value. But from my knowledge:if the M & A is viewed prospectively (restate everything and look forward) by treating the transaction as a purchase. ... Read More
Options Exerciseable versus Outstanding - Complex LBO
Can you assist in definitions for me as a little confused, this also applies to the Quick & Dirty Dilution model: 1. Options Outstanding: options currently held by investors which will be exercised when stock price is in the money 2. Options Exerciseable: what is the difference between this an... Read More
Can you assist in definitions for me as a little confused, this also applies to the Quick & Dirty Dilution model: 1. Options Outstanding: options currently held by investors which will be exercised when stock price is in the money 2. Options Exerciseable: what is the difference between this an... Read More
Enterprise Value Formula
Hi,
In regards to the enterprise value formula, is the cash component of the formula "[i:2zdp2ksj]excess[/i:2zdp2ksj] cash" or "cash and cash equivalents" on the balance sheet? Please explain. Thanks!
Eric
Hi,
In regards to the enterprise value formula, is the cash component of the formula "[i:2zdp2ksj]excess[/i:2zdp2ksj] cash" or "cash and cash equivalents" on the balance sheet? Please explain. Thanks!
Eric
question about exercisable options in an M&A transaction
For a target, in an M&A transaction, why does the fully diluted shares outstanding include all outstanding in-the-money options and not all exercisable options?
For a target, in an M&A transaction, why does the fully diluted shares outstanding include all outstanding in-the-money options and not all exercisable options?
IRR>WACC, chose this project?
This is an interview question: why you do a project when WACC is 12% while IRR 10%?
I know one reason is real option that may make it more profitable later on. But what are other reasons, do you know? could you name some?
This is an interview question: why you do a project when WACC is 12% while IRR 10%?
I know one reason is real option that may make it more profitable later on. But what are other reasons, do you know? could you name some?
does the idiosyncratic risk of the company change?
does the idiosyncratic risk of the company change during the holding period? If so, does the change in idiosyncratic risk affect any calculation with respect to the LBO analysis? Why? If not, why?
does the idiosyncratic risk of the company change during the holding period? If so, does the change in idiosyncratic risk affect any calculation with respect to the LBO analysis? Why? If not, why?
Perhaps the numerical example from the Financial Modeling Module would help: Company ABC has Revenue of $500 and Expenses of $300. Where it differs between GAAP and IRS reporting is depreciation, where GAAP reports $20 and IRS reports $40 (due to MACRS). So Company ABC has EBT of $180 under GAAP an... Perhaps the numerical example from the Financial Modeling Module would help:
Company ABC has Revenue of $500 and Expenses of $300. Where it differs between GAAP and IRS reporting is depreciation, where GAAP reports $20 and IRS reports $40 (due to MACRS). So Company ABC has EBT of $180 under GAAP and $160 under IRS reporting. I can understand that because the statutory rate is 40%, then the taxes owed to the IRS is $160 x 40% = $64. However, the example shows that taxes owed under GAAP is $180 x 40% = $72. Clearly, this is how the DTL is derived.
But my question is why Company ABC doesn't report $64 in taxes owed under GAAP, much like the example does later on in the M&A Module, where under the 338h10 election, the GAAP taxes owed is simply the amount owed to the IRS (EBIT $1000 x 40% = $400) so that the effective tax rate is not 40% but 36.4% ($400 / GAAP EBIT $1100 = 36.4%)?
You said that "it just so happens that the effective tax rate (GAAP) is very close to 40%"... but wouldn't the effective tax rate then be calculated as 64/180, or 35.6%?
I apologize beforehand if this is somewhat confusing. A bit hard to verbalize. Read More