Posts by: WST Expert 1
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
Re: EPS adjustments
Interest on convertible debt is indeed part of net interest expense on the IS. However, it is convertible debt and if the accountants have determined that it is dilutive for EPS purposes, then the converts are treated on an "as if converted basis". In that case, the debt is treated as equity (so sha... Read More
Interest on convertible debt is indeed part of net interest expense on the IS. However, it is convertible debt and if the accountants have determined that it is dilutive for EPS purposes, then the converts are treated on an "as if converted basis". In that case, the debt is treated as equity (so sha... Read More
Re: Reverse Morris Trust (RMT)
A Reverse Morris Trust is a transaction that combines a divisive reorganization (spin-off) with an acquisitive reorganization (statutory merger) to allow a tax-free transfer (in the guise of a merger) of a subsidiary under United States law. Structure: A Reverse Morris Trust is used when a paren... Read More
A Reverse Morris Trust is a transaction that combines a divisive reorganization (spin-off) with an acquisitive reorganization (statutory merger) to allow a tax-free transfer (in the guise of a merger) of a subsidiary under United States law. Structure: A Reverse Morris Trust is used when a paren... Read More
Re: Ctrl space/ shift space to select entire column/row not working
Yes, it is REALLY annoying. Here is what has worked in the past: 1) Don't disable the key for switching language but rather, change the keystroke to something you will never use and isn't being used for anything else. 2) Save the settings and reboot the computer. 3) Confirm that Ctrl+Space works... Read More
Yes, it is REALLY annoying. Here is what has worked in the past: 1) Don't disable the key for switching language but rather, change the keystroke to something you will never use and isn't being used for anything else. 2) Save the settings and reboot the computer. 3) Confirm that Ctrl+Space works... Read More
Re: Synergies/(Cushion) to break even
Yes you are correct in your re-phrasing. However, instead of the word "loss" we would recommend the word "buffer" or "cushion".
Yes you are correct in your re-phrasing. However, instead of the word "loss" we would recommend the word "buffer" or "cushion".
Re: Synergies/(Cushion) to break even
The synergies figure is positive because if you are dilutive, we usually say "amount of synergies required to breakeven" and that figure is stated as a positive number. It wouldn't make as much sense to say "we need negative $10MM synergies to breakeven". This is the reason why the formula starts wi... Read More
The synergies figure is positive because if you are dilutive, we usually say "amount of synergies required to breakeven" and that figure is stated as a positive number. It wouldn't make as much sense to say "we need negative $10MM synergies to breakeven". This is the reason why the formula starts wi... Read More
Re: Convertible Securities
That is correct: upon conversion, debt goes down on the BS. Technically, it goes down by the carrying value (as opposed to face value) but for simplicity, assuming carrying value = face value. If significantly different, then accounting for premiums/discounts on debt would kick in (covered extensive... Read More
That is correct: upon conversion, debt goes down on the BS. Technically, it goes down by the carrying value (as opposed to face value) but for simplicity, assuming carrying value = face value. If significantly different, then accounting for premiums/discounts on debt would kick in (covered extensive... Read More
Re: Modeling a Serial Acquirer
For highly acquisitive companies, we would typically build the model assuming no acquisitions and then layer on acquisitions to split the core, organic growth business vs earnings/valuation from acquisitions. The tradeoff (if you recall from our M&A courses) is whether or not the acquisitions are ac... Read More
For highly acquisitive companies, we would typically build the model assuming no acquisitions and then layer on acquisitions to split the core, organic growth business vs earnings/valuation from acquisitions. The tradeoff (if you recall from our M&A courses) is whether or not the acquisitions are ac... Read More
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.