Posts by: WST Expert 1
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
Re: Accounting for vested but unexercised stock options...and then again when they are exercised
Don't forget that NI does not directly impact the balance sheet; it flows through Retained Earnings. Thus, we would re-write/clarify as follows: 1) NI -100 which also means RE -100 on Liability side 2) Cash -100 on Asset side => double-entry balanced at this point However, since stock opti... Read More
Don't forget that NI does not directly impact the balance sheet; it flows through Retained Earnings. Thus, we would re-write/clarify as follows: 1) NI -100 which also means RE -100 on Liability side 2) Cash -100 on Asset side => double-entry balanced at this point However, since stock opti... Read More
Re: Accounting for vested but unexercised stock options...and then again when they are exercised
You are correct in your summary of major accounting entries for stock options. If a company issues stock options amounting to a value of $100 (as in your example), let's say that Net Income goes down by $100 (ignoring taxes for simplicity). Therefore, CFO is also decreased by $100. Since these optio... Read More
You are correct in your summary of major accounting entries for stock options. If a company issues stock options amounting to a value of $100 (as in your example), let's say that Net Income goes down by $100 (ignoring taxes for simplicity). Therefore, CFO is also decreased by $100. Since these optio... Read More
Re: Stock Options Tables in 10ks do not seem to be itemized like they are in the course
Yes, that is a good observation. Recently, in the past few years companies have been reducing their level of disclosures such that they just give a total sets of options as opposed to breaking it out individually. Some companies, however, such as Goodyear, even up to a year or two ago continue to br... Read More
Yes, that is a good observation. Recently, in the past few years companies have been reducing their level of disclosures such that they just give a total sets of options as opposed to breaking it out individually. Some companies, however, such as Goodyear, even up to a year or two ago continue to br... 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... 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 shares outstanding goes up) and the interest is wiped out. That is the reason why NI is adjusted for interest on convertible securities - notice that it is an additional to Net Income, as if the convertible debt was equity from the beginning of the time period. Read More