Posts by: Hamilton L
Re: Question about Change in Comprehensive Income
Hi Gianna, Remember not to mix IS and BS in this case. OCI (Other Comprehensive Income) is for that current IS period. However, anything from the Balance Sheet is a cumulative figure over time, simply reflecting the accrued plus/minus amounts historically and correct as of the date in time (in th... Read More
Hi Gianna, Remember not to mix IS and BS in this case. OCI (Other Comprehensive Income) is for that current IS period. However, anything from the Balance Sheet is a cumulative figure over time, simply reflecting the accrued plus/minus amounts historically and correct as of the date in time (in th... Read More
Re: IRR Calculation
You are correct. We left out two zeroes in Years 1 and 2 (development period, cells E55:F55), which would drop IRR (with TV) down to 23.5%. Additionally, two zeroes belong in cells E53:F53 which drops IRR (without TV) down to 23.4%. Good catch and thank you for pointing it out. Part of the exercise ... Read More
You are correct. We left out two zeroes in Years 1 and 2 (development period, cells E55:F55), which would drop IRR (with TV) down to 23.5%. Additionally, two zeroes belong in cells E53:F53 which drops IRR (without TV) down to 23.4%. Good catch and thank you for pointing it out. Part of the exercise ... Read More
Re: Using book value in Residual Income
Yes, good point. $190 market value less $53 book value = $137 of premium divided by $53 book value = 2.6x premium over book value as the additional value in excess of book value to be added on top of 5th year book value for terminal value. For our readers out there - to clarify why we don't add T... Read More
Yes, good point. $190 market value less $53 book value = $137 of premium divided by $53 book value = 2.6x premium over book value as the additional value in excess of book value to be added on top of 5th year book value for terminal value. For our readers out there - to clarify why we don't add T... Read More
Re: Capital charge under EVA
We would agree with you here per the thread on Residual Income. For folks stumbling upon this post, please go here as well: https://www.wstuniversity.com/forum/wst_self_study_q_a-2/package_3:_advanced_financial_modeling-91/enhancements_to_the_core_model___part_ii-94/residual_income_-100?single=20... Read More
We would agree with you here per the thread on Residual Income. For folks stumbling upon this post, please go here as well: https://www.wstuniversity.com/forum/wst_self_study_q_a-2/package_3:_advanced_financial_modeling-91/enhancements_to_the_core_model___part_ii-94/residual_income_-100?single=20... Read More
Re: Using book value in Residual Income
You are correct on all three counts and truth be told we're a bit embarrassed by the multiple lapses on this analysis. Ummm... in our defense, "no one" uses Residual Income approach and it's highly academic...? :-) We're not trying to skirt away here - we take full responsibility for not getting it... Read More
You are correct on all three counts and truth be told we're a bit embarrassed by the multiple lapses on this analysis. Ummm... in our defense, "no one" uses Residual Income approach and it's highly academic...? :-) We're not trying to skirt away here - we take full responsibility for not getting it... Read More
Re: Income Taxes
This is fixed shortly later in the videos - good catch!
This is fixed shortly later in the videos - good catch!
Re: 2005A EBIT
The multiples tab should be pulling in from the Adjusted EBIT figures - those would be the correct figures to use in the real world.
The multiples tab should be pulling in from the Adjusted EBIT figures - those would be the correct figures to use in the real world.
Re: Perpetuity Growth Method
This is the same reason that we encourage folks to use Tax-Effected EBIT instead of FCFF in the terminal value calculation using perpetual growth. The entire point of perpetual growth method is that it's only applicable for stable growth, mature, cash cow businesses. Therefore, in the long run, CapE... Read More
This is the same reason that we encourage folks to use Tax-Effected EBIT instead of FCFF in the terminal value calculation using perpetual growth. The entire point of perpetual growth method is that it's only applicable for stable growth, mature, cash cow businesses. Therefore, in the long run, CapE... Read More
Re: investments in JV or associates
This is a tricky question and the answer is counter-intuitive. In essence, JVs that are treated as equity method (20%-50%) are considered the opposite of Minority Interest / Non-Controlling Interest. The idea is that in theory, one call sell off all the JV stakes and receive cash. Therefore, mar... Read More
This is a tricky question and the answer is counter-intuitive. In essence, JVs that are treated as equity method (20%-50%) are considered the opposite of Minority Interest / Non-Controlling Interest. The idea is that in theory, one call sell off all the JV stakes and receive cash. Therefore, mar... Read More
Hello there,
This is covered in our financial modeling courses in which we map out exactly how to derive future cash flow statement based on income statement and balance sheet projections. The specific course would be Advanced Financial Modeling - Core Model under our Package 3.