Posts by: WST Expert 1
Re: valuation for Balance Sheet based company like banks and insurance
Unlike more traditionally structured companies, banks and insurance carriers do not adhere to the concept of TEV. For example, cash in most businesses is relatively straightforward. But for a bank, cash is both COGS *and* Revenue, in different forms. So the concepts of cash and debt no longer apply ... Read More
Unlike more traditionally structured companies, banks and insurance carriers do not adhere to the concept of TEV. For example, cash in most businesses is relatively straightforward. But for a bank, cash is both COGS *and* Revenue, in different forms. So the concepts of cash and debt no longer apply ... Read More
Re: Multi currency model
The best practice is to always model out everything in functional currency. So if you have a USD portfolio and a EUR portfolio (different portfolios), model those out in their specific local currency (USD and EUR). Then translate each of them separately to the local (reported) currency and then c... Read More
The best practice is to always model out everything in functional currency. So if you have a USD portfolio and a EUR portfolio (different portfolios), model those out in their specific local currency (USD and EUR). Then translate each of them separately to the local (reported) currency and then c... Read More
Re: Multi currency model
We do not have a separate training module for multi-currency modeling, although we do adhere to a set of best practices when working in these situations. If you have a more specific question, we’d be more than happy to reply.
We do not have a separate training module for multi-currency modeling, although we do adhere to a set of best practices when working in these situations. If you have a more specific question, we’d be more than happy to reply.
Re: Cost of Funding
For borrowing cost, we would simply take the actual weighted average coupon (or yield) of the bank. For yield, you can easily obtain via current market data. Please don't over think this. For WACC, yes include weighted average cost of equity as well. There are PLENTY of academic papers with quite co... Read More
For borrowing cost, we would simply take the actual weighted average coupon (or yield) of the bank. For yield, you can easily obtain via current market data. Please don't over think this. For WACC, yes include weighted average cost of equity as well. There are PLENTY of academic papers with quite co... Read More
Re: How to Analyze a 10K: Bear Stearns example
The goal is to calculate fully diluted shares. By using only 100MM shares (basic), it is not representing the full valuation of the company. So if you own 10MM shares, you might think you own 10% (10MM divided by 100MM), but reality is, you would only own 6.7% (10MM divided by 150MM). And of course,... Read More
The goal is to calculate fully diluted shares. By using only 100MM shares (basic), it is not representing the full valuation of the company. So if you own 10MM shares, you might think you own 10% (10MM divided by 100MM), but reality is, you would only own 6.7% (10MM divided by 150MM). And of course,... Read More
Re: Liquidity and Cash reserve requirements
Yes, you can add an extra row somewhere for reserve/liquidity requirements. We didn't add this explicitly because if the bank is even remotely close to this threshold, there's really no point in building a standalone run-rate model - they'd be considered distressed and the FDIC (in the USA) would ha... Read More
Yes, you can add an extra row somewhere for reserve/liquidity requirements. We didn't add this explicitly because if the bank is even remotely close to this threshold, there's really no point in building a standalone run-rate model - they'd be considered distressed and the FDIC (in the USA) would ha... Read More
Re: CapitalIQ Shortcuts Override
If you'd like to use the WST Macros keyboard shortcuts while using other add-ins at the same time, we'd recommend disabling their shortcut functionality. You can usually find this in their settings menu. Please see the free guide on our website under About -> Resources -> Technical Resources -> "How... Read More
If you'd like to use the WST Macros keyboard shortcuts while using other add-ins at the same time, we'd recommend disabling their shortcut functionality. You can usually find this in their settings menu. Please see the free guide on our website under About -> Resources -> Technical Resources -> "How... Read More
Re: Provisioning IFRS 9
Expected credit losses are an input to the model. We base on historical trend absent internal asset level details. Therefore, assuming management is following the guidance, as they ought to be, then business as usual for modeling.
Expected credit losses are an input to the model. We base on historical trend absent internal asset level details. Therefore, assuming management is following the guidance, as they ought to be, then business as usual for modeling.
Re: Tax effects on cash flow
Maybe or maybe not! Taxes are calculated including the impact of the deferral and as such, is not needed to be considered in this case. Incorporating the effect of deferred tax impact is beyond the scope of this exercise.
Maybe or maybe not! Taxes are calculated including the impact of the deferral and as such, is not needed to be considered in this case. Incorporating the effect of deferred tax impact is beyond the scope of this exercise.
If a bank isn't publicly traded, we must include a private company discount on the valuation. So in that case, we'd use the techniques covered in our "Private Company Valuation" package. Non-public companies can be difficult, but not impossible to value. To learn more, select "Order More" at the ... If a bank isn't publicly traded, we must include a private company discount on the valuation. So in that case, we'd use the techniques covered in our "Private Company Valuation" package. Non-public companies can be difficult, but not impossible to value.
To learn more, select "Order More" at the top-right of the menu above, and click to reveal the full curriculum for each respective package/course. Read More