Posts by: WST Expert 1
Re: Cash
Premium should not included because once private, there is a lack of liquidity discount. In addition, if IPO'ing as an exit, the markets are priced without control premium. What is the point of "cash conversation ratio"? To calculate actual cash generated vs Net Income? For sure, we are skeptical... Read More
Premium should not included because once private, there is a lack of liquidity discount. In addition, if IPO'ing as an exit, the markets are priced without control premium. What is the point of "cash conversation ratio"? To calculate actual cash generated vs Net Income? For sure, we are skeptical... Read More
Re: Cash
1) Regarding taxes - your tax rate utilized in theory represents effective tax rate which already incorporates income tax holiday or other abatements. Conceptually, you got the idea - just make sure your FCFF is pre-capital structure, including taxes - Just pretend there is no debt and model out FCF... Read More
1) Regarding taxes - your tax rate utilized in theory represents effective tax rate which already incorporates income tax holiday or other abatements. Conceptually, you got the idea - just make sure your FCFF is pre-capital structure, including taxes - Just pretend there is no debt and model out FCF... Read More
Re: Cash
If the underfunded pension amount is material, then you treat it like debt - that is TEV of your target company stays the same but the equity value component is lower - in other words, the size of the pie stays the same but the slices of the pie are altered. The logic is that you must replenish this... Read More
If the underfunded pension amount is material, then you treat it like debt - that is TEV of your target company stays the same but the equity value component is lower - in other words, the size of the pie stays the same but the slices of the pie are altered. The logic is that you must replenish this... Read More
Re: Cash
Recall our conversation that we adjust for capital structure in valuation at the END of the DCF valuation. FCFE, similar to PE is the root of all evil in valuation. Since the point of FCFF is to calculate pre-capital structure cash flow, we want to make sure that the taxes properly reflect this logi... Read More
Recall our conversation that we adjust for capital structure in valuation at the END of the DCF valuation. FCFE, similar to PE is the root of all evil in valuation. Since the point of FCFF is to calculate pre-capital structure cash flow, we want to make sure that the taxes properly reflect this logi... Read More
Re: EV/EBITDA vs. P/E
Please note that we would highly recommend avoiding use of the “EV” acronym since it is misleading – equity value or enterprise value? We always recommend use of TEV for [Total] Enterprise Value. Regarding your actual question, generally TEV/EBITDA will be lower than PE multiples due to sim... Read More
Please note that we would highly recommend avoiding use of the “EV” acronym since it is misleading – equity value or enterprise value? We always recommend use of TEV for [Total] Enterprise Value. Regarding your actual question, generally TEV/EBITDA will be lower than PE multiples due to sim... Read More
Re: Derivative Assets for E&P Companies
If you know FOR SURE that the derivative assets are to be monetized, then yes, you decrease the balance to zero. However, you run the REALIZED gains/losses ONLY via the IS and the actual principal will come through either CFI or CFF based on the accounting treatment. And yes, zero on BS going forwa... Read More
If you know FOR SURE that the derivative assets are to be monetized, then yes, you decrease the balance to zero. However, you run the REALIZED gains/losses ONLY via the IS and the actual principal will come through either CFI or CFF based on the accounting treatment. And yes, zero on BS going forwa... Read More
Re: JCP LBO Template
For sure, do not double count preferred debt/stock. Especially for credit ratios, you always want to split out preferred OUT of both debt and equity, primarily because the rating agencies will give partial weight to debt and equity. We almost never include preferred as part of equity since our... Read More
For sure, do not double count preferred debt/stock. Especially for credit ratios, you always want to split out preferred OUT of both debt and equity, primarily because the rating agencies will give partial weight to debt and equity. We almost never include preferred as part of equity since our... Read More
Re: Formatting issues when trying to use match/vlookup
Hi, The first step would be to verify that any date cells are actually being interpreted by Excel as dates. For example, if you have a text string like "April 27, 2015" formatted as Text, then Excel cannot directly compare or otherwise manipulate that cell with regards to other dates. Extra space... Read More
Hi, The first step would be to verify that any date cells are actually being interpreted by Excel as dates. For example, if you have a text string like "April 27, 2015" formatted as Text, then Excel cannot directly compare or otherwise manipulate that cell with regards to other dates. Extra space... Read More
Re: Cash
If a true asset sale, then correct, you are only purchasing certain assets and liabilities. Each of those would be valued separately to arrive at "fair" value. The analysis basically becomes build the asset vs. buy the asset. You could also look at it from an TEV perspective based on the nature of t... Read More
If a true asset sale, then correct, you are only purchasing certain assets and liabilities. Each of those would be valued separately to arrive at "fair" value. The analysis basically becomes build the asset vs. buy the asset. You could also look at it from an TEV perspective based on the nature of t... Read More
You are correct - The QS cell references should indeed be F$102 with the column not locked so that it can be propagated across in the event the QS % changes in the future years. Thank you for pointing that out! On a side note, if indeed the QS % changes in the future, we would usually recommend b... You are correct - The QS cell references should indeed be F$102 with the column not locked so that it can be propagated across in the event the QS % changes in the future years. Thank you for pointing that out!
On a side note, if indeed the QS % changes in the future, we would usually recommend building a separate LOB worksheet for more transparency. Read More