Posts by: WST Expert 1
WACC of a private company?
In this case, you should estimate the ideal target capital structure of your firm, primarily based on an average or "run-rate" capital structure based on comps. Many private companies have little to no debt so the WACC somtimes is the cost of equity in your calcuation. For a "normalized" WACC you ca... Read More
In this case, you should estimate the ideal target capital structure of your firm, primarily based on an average or "run-rate" capital structure based on comps. Many private companies have little to no debt so the WACC somtimes is the cost of equity in your calcuation. For a "normalized" WACC you ca... Read More
Re: Other Income and Expense
It depends primarily on if it is considered part of recurring operations. In WMT's case, that Other Income is primarily Membership Fees. Interestingly enough, in subsequent years, WMT no longer calls it Other Income and renamed it to Membership and Other. And Net Sales is now Merchandise Sales. In ... Read More
It depends primarily on if it is considered part of recurring operations. In WMT's case, that Other Income is primarily Membership Fees. Interestingly enough, in subsequent years, WMT no longer calls it Other Income and renamed it to Membership and Other. And Net Sales is now Merchandise Sales. In ... Read More
Re: Accounting for Discontinued Ops on financial statements
Hi Carruti, Yes, this would fall under our "divestitures" or "asset sales" training module, essentially the opposite of our merger class. We don't get into strategic rationale (beyond the obvious reasons), but we do get into how to model out divestitures and financial impact. P... Read More
Hi Carruti, Yes, this would fall under our "divestitures" or "asset sales" training module, essentially the opposite of our merger class. We don't get into strategic rationale (beyond the obvious reasons), but we do get into how to model out divestitures and financial impact. P... Read More
CAPM alpha risk
Generally speaking, don't get caught up in the hype about the "quest for alpha". CAPM (which we recognize is a THEORY still) estimates the required return from an equity (or security). A stock's deviation from CAPM is referred to as alpha (excess returns) and as such, should not be incorporated into... Read More
Generally speaking, don't get caught up in the hype about the "quest for alpha". CAPM (which we recognize is a THEORY still) estimates the required return from an equity (or security). A stock's deviation from CAPM is referred to as alpha (excess returns) and as such, should not be incorporated into... Read More
Re: Problem with choose and average formulas
At the risk of not answering your question, please re-direct yourself to our circular reference module, including with your online access login. Alternately, go to our youtube channel: www.youtube.com/wstss and do a sea... Read More
At the risk of not answering your question, please re-direct yourself to our circular reference module, including with your online access login. Alternately, go to our youtube channel: www.youtube.com/wstss and do a sea... Read More
Re: Inventory Days semi-annual calculation
Good question! Since the COGS you are using would be for 1H 2011, you must match the same time periods. Thus, for average inventory, you would use YE 2010 and June 2011. June 2010 would be mis-match of numerators and denominators. That logic would apply for calculating period-over-period growth rat... Read More
Good question! Since the COGS you are using would be for 1H 2011, you must match the same time periods. Thus, for average inventory, you would use YE 2010 and June 2011. June 2010 would be mis-match of numerators and denominators. That logic would apply for calculating period-over-period growth rat... Read More
Re: Other Income and Expense
Don't forget, for the most part, you still you have to be GAAP compliant. So, while you have discretion, you can't just arbitrarily apply judgment.
Don't forget, for the most part, you still you have to be GAAP compliant. So, while you have discretion, you can't just arbitrarily apply judgment.
Re: simple data table question
Sounds like you hit wrong keystroke. Our WST macros shortcut Ctrl+Alt+Y makes formatting of a cell into "Year "; you were probably aiming for Ctrl+shift+Y for our yellow shading macro. Simply select your data and change formatting: Ctrl+Shift+M for our "money" macro, or standard... Read More
Sounds like you hit wrong keystroke. Our WST macros shortcut Ctrl+Alt+Y makes formatting of a cell into "Year "; you were probably aiming for Ctrl+shift+Y for our yellow shading macro. Simply select your data and change formatting: Ctrl+Shift+M for our "money" macro, or standard... Read More
DCF EBITDA multiple approach
This is covered in detail in our Corporate Valuation and Basic Financial Modeling classes - last year's EBITDA (called Terminal Year EBITDA) times EBITDA exit multiple in fact gives you "Total Enterprise Value at the end of the Terminal Year". This is known as Terminal Value which indeed IS Enterpri... Read More
This is covered in detail in our Corporate Valuation and Basic Financial Modeling classes - last year's EBITDA (called Terminal Year EBITDA) times EBITDA exit multiple in fact gives you "Total Enterprise Value at the end of the Terminal Year". This is known as Terminal Value which indeed IS Enterpri... Read More
If you use current EPS, you will get a circular reference because EPS hasn't yet been finalized until interest expense is finalized, which of course, introduces the entire circular reference logic. By using trailing EPS (last period), you avoid this problem. So in essence, just use trailing PE rati... If you use current EPS, you will get a circular reference because EPS hasn't yet been finalized until interest expense is finalized, which of course, introduces the entire circular reference logic. By using trailing EPS (last period), you avoid this problem.
So in essence, just use trailing PE ratio (as long as somewhat steady). Simply graph out Current Stock Price divided by LTM EPS - do this on a daily basis over 2-3 years and you'll easily spot the "right" PE ratio. Read More