Posts by: WST Expert 1
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
Re: Cash
Yes, correct. However, keep in mind the previous explanation that most of the time, companies have enough working capital already, so hence the adjustment is not typically made.
Yes, correct. However, keep in mind the previous explanation that most of the time, companies have enough working capital already, so hence the adjustment is not typically made.
Re: Cash
In the definition of TEV, it should indeed be Total Debt less EXCESS cash to arrive at Net Debt. Therefore, one SHOULD split cash into operating cash required for the business and excess cash. However, it is not always standard practice to do so and so, the default is that all cash is treated as exc... Read More
In the definition of TEV, it should indeed be Total Debt less EXCESS cash to arrive at Net Debt. Therefore, one SHOULD split cash into operating cash required for the business and excess cash. However, it is not always standard practice to do so and so, the default is that all cash is treated as exc... Read More
Re: Difference between cost of sales and cost of inventory.
Good question. That's because COGS consists of two major categories: Raw Materials (primarily inventory) and Conversion (direct labor, depreciation or rent on factory and machinery, utilities, freight in, etc). As such the "cost of sales" is usually going to be higher than "cost of inventories sold"... Read More
Good question. That's because COGS consists of two major categories: Raw Materials (primarily inventory) and Conversion (direct labor, depreciation or rent on factory and machinery, utilities, freight in, etc). As such the "cost of sales" is usually going to be higher than "cost of inventories sold"... 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... 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 shortfall which is considering a massive working capital requirement which reduces equity value since they have not been properly funding their pensions. In the calculation of existing TEV multiples for your comps, you would also add the underfunded pension amounts to debt (making TEV bigger) so that you are making your comparisons correct. Read More