Re: making cash flow statement and debt sweep into a quarterly model
Generally, when building quarterly projections, we do not need or project out the annual debt sweep. Everything on the debt sweep is quarterly, as such, you don't have to worry about the fiscal year end number. Q4 Cash Before Discretionary should definitely not be the same as the fiscal year end ... Generally, when building quarterly projections, we do not need or project out the annual debt sweep. Everything on the debt sweep is quarterly, as such, you don't have to worry about the fiscal year end number.

Q4 Cash Before Discretionary should definitely not be the same as the fiscal year end because it is a separate standalone quarter that is needed to balance Q4 on its own. Similar to the Income Statement, Q4 on CF and Debt represent quarter PERIOD not quarter END balances.

You are correct in the other statement, that Q4 debt balance is the same as fiscal year end balance because that is a BS item that represents a POINT in time as opposed to a period in time. Read More

Re: TGT Debt for ROC
At the 14:30 mark (thru 14:40), the instructor inputs 753+9119 = 9872 for debt. Indeed at the 35:50 mark, the instructor accidentally inputs 8872 in the denominator when it should have been 9872, for a correct ROC of 11.9%

Re: Comparable companies analysis
Please refer to the discussion in your previous post on "Equity value derived from DCF". Based on the phrasing of your question here, we would consider the market cap to be pre-money since it presumably is based on current EPS / Net Income and doesn't incorporate the new money (again, see previous p... Please refer to the discussion in your previous post on "Equity value derived from DCF". Based on the phrasing of your question here, we would consider the market cap to be pre-money since it presumably is based on current EPS / Net Income and doesn't incorporate the new money (again, see previous post on Uses of Funds from the IPO). Read More

Re: WACC
1) Strict interpretation of fundamental concepts of CAPM state that the risk free rate should always be the UST (i.e. 10 year UST or 20 year UST bootstrapped from the 10- and 30-year UST). A sovereign spread should be added in the market risk premium portion of CAPM to account for the country specif... 1) Strict interpretation of fundamental concepts of CAPM state that the risk free rate should always be the UST (i.e. 10 year UST or 20 year UST bootstrapped from the 10- and 30-year UST). A sovereign spread should be added in the market risk premium portion of CAPM to account for the country specific premium (i.e. Korea in your example). The exchange it will be listed on (HK) and the reporting currency are irrelevant to the concept of CAPM. For full explanation of why these are the case, this is covered thoroughly in our Private Company Valuation Course, which discusses the international context.

2) If there are enough peers in the same region and /or same exchange, you definitely want to focus on those comparable. However, for large significant competitors that are global (and not in the same region or exchange), these should always be included in your comps as well. Read More

Re: Prepaid Rent & Selling of Assets
1) Prepaid expenses = Cash DOWN and prepaid assets UP At month-end closing entry, the amount of the prepaid asset that is used up in the period: Expenses UP and prepaid assets DOWN 2) If you sell a machine for $10K and its book value (net PPE) is $8.5K, then you will report a gain on the IS of ... 1) Prepaid expenses = Cash DOWN and prepaid assets UP
At month-end closing entry, the amount of the prepaid asset that is used up in the period:
Expenses UP and prepaid assets DOWN

2) If you sell a machine for $10K and its book value (net PPE) is $8.5K, then you will report a gain on the IS of $1.5K which is usually labeled as a separate line item called "Gain on Sale of Assets". This would increase EBT by $1.5K and would have a resulting tax increase as well, thereby increasing Net Income by $1.5K * (1-T). On the CF Statement, CFO would increase by $1.5K * (1-T) since CFO starts with Net Income. Assuming the $10K was received in cash, then no other adjustments to CFO. The $8.5K Net PPE book value would be reflected in CFI as "Sale of Assets".

On the BS, Cash UP $10K, Net PPE down $8.5K and Retained Earnings up $1.5K. And of course, whatever cash out and RE down due to the tax payment. To be more precise, Gross PPE goes down $34K and accumulated depreciation down by $34K - $8.5K = $25,500. Read More