Re: One time items?
The easiest way to answer this question is to ask yourself if these items will recur again in the future. For Gain/Loss on Sale of Assets, generally we do not include since one does not dispose of assets every year. However, there are always exceptions - i.e. in one of our case studies, Goodyear, th... The easiest way to answer this question is to ask yourself if these items will recur again in the future. For Gain/Loss on Sale of Assets, generally we do not include since one does not dispose of assets every year. However, there are always exceptions - i.e. in one of our case studies, Goodyear, they were in the middle of a multi-year restructuring program. Since that was deemed to recur again, we didn't adjust it out from historical results. FX gains/losses generally we don't adjust out - i.e. leave it in as part of actual normalized results. However, for FX in future projections, we typically assume constant currency, meaning no change in FX. These topics and then some, are covered extensively in our Complex Trading Comps course in which we go through 99%+ of the adjustments you'll ever hit across and we teach you the judgement side of determining adjust or not. Constant currency is covered extensively in our Segment Build-up course. Please consider those as a solid refresher on these fundamental concepts which are key to building financial models.

Thank you. Read More

Re: Unlevered Free Cash flows vs. Tax Effected Ebit as starting point for Gordon Growth Method
Actually this is covered in our Corporate Valuation course. In short, the run-rate, normalized FCFF figure is Tax-Effected EBIT because in the long run, depreciation and CapEx cancel out for a slow growth, mature, cash cow business. If the company doesn't fit that profile then, perpetuity growth met... Actually this is covered in our Corporate Valuation course. In short, the run-rate, normalized FCFF figure is Tax-Effected EBIT because in the long run, depreciation and CapEx cancel out for a slow growth, mature, cash cow business. If the company doesn't fit that profile then, perpetuity growth method doesn't really apply to the company being valued. Generally we assume that working capital changes are very close to zero for such a company as they aren't growing much. For the full quantitative explanation of this, please refer back to our Corporate Valuation course. Thank you. Read More

Re: Implied statement of cash flows vs. actual statement of cash flows
The process that we went through in the class is for future projections, not historical. Since we can only use available information that we have access to at the time that we are building the model, for future projections, we have no choice but to assume zero non-cash items in the future. Historica... The process that we went through in the class is for future projections, not historical. Since we can only use available information that we have access to at the time that we are building the model, for future projections, we have no choice but to assume zero non-cash items in the future. Historically, you always use the mgmt provided numbers on the CF Statement, since those are correct (in the sense that they are audited or compiled figures). Let us know if that clarification makes sense. Read More

Re: Restricted Stock Units/Equity Compensation Plans
RSU's are not treated as options because they are (usually) outright grants that will increase shares outstanding 1 for 1, as opposed to options or warrants that have a strike price. Once the RSU is exercisable (vesting period over), then they are added to Basic Shares Outstanding for the purposes o... RSU's are not treated as options because they are (usually) outright grants that will increase shares outstanding 1 for 1, as opposed to options or warrants that have a strike price. Once the RSU is exercisable (vesting period over), then they are added to Basic Shares Outstanding for the purposes of calculating Diluted Shares Outstanding. The way we typically treat this is to add a RSU input cell in the "Trading Statistics" sheet of model, which contains our options information and we include the RSU in our sum for both EPS and TEV purposes. Similar to options, you would use exercisable for run-rate valuation and outstanding for a change of control (the non-vested immediately vests). For EPS purposes, *usually* the accountants/auditors are using outstanding since it's the "worse case scenario" in terms of dilution. Warrants and rights are treated similar to options because they are all "fractional share equivalents" given the presence / requirement of strike (exercise) price. As such, options, warrants and rights are all calculated the same way using the MAX(0) function as described in our videos and courses. Recall warrants are usually issued to investors with a way out of the money strike and vesting years later as opposed to options which are typically used to management as part of their SBC (stock based compensation), but the economic (and financial) impacts here are the same for financial modeling and valuation purposes. Hope that was helpful! Read More

Re: Editing WST Macros
There is no setting in Excel or VBA to take global priority. It is random. Sometimes our macro takes priority, sometimes other macros take priority. As far as we can tell, it's not even based on the last set of macros installed.