Re: 338h10 Election and pro forma balance sheet
A DTL would be created due to FMV step-up of Tangible Assets (if any). Aside from that extra adjustment, for tax purposes, a DTL or DTA would not be created since the entire amount above book value is considered Goodwill which is then tax deductible in future years. The book value portion of course,... A DTL would be created due to FMV step-up of Tangible Assets (if any).
Aside from that extra adjustment, for tax purposes, a DTL or DTA would not be created since the entire amount above book value is considered Goodwill which is then tax deductible in future years. The book value portion of course, continues to get depreciated and tax deducted as well.

The best way to do this is to create a separate tax schedule which allocates current taxes (IRS) and GAAP taxes (current + deferred). Read More

RE: Corporate Valuation Methodologies: about the case study
1) The different diluted shares outstanding are calculated using a cumulative method of all your option tranches, something that is not in the scope of the courses unfortunately (nor that important honestly). 2) Tax shield on preferred is applicable IF the interest on preferred is tax deductible... 1) The different diluted shares outstanding are calculated using a cumulative method of all your option tranches, something that is not in the scope of the courses unfortunately (nor that important honestly).

2) Tax shield on preferred is applicable IF the interest on preferred is tax deductible (such as TOPrS, HITS, CRESTS, and other acronyms that effectively allow a company to deduct the preferred interest paid, something quite common). Since preferred is part of the capital structure, it is part of leverage of beta. Although it's not debt, it is a form of capital. The decision to include preferred inside or outside of the (1-T) depends on its tax deductibility.

3) The 4.5x to 5.0x range is a blended multiple of the entire company. You gross up overhead because if you had $10 less of expenses, your company value goes up by $50 (assuming 5x). Read More

Re: Thoughts after going through package3 (advanced modeling)
Thank you for your thoughts! 1) Actually, depreciation is projected and calculated on a standalone basis and then ALLOCATED to COGS and SG&A based on usage of the assets. Thus, on the IS, as you noted, depreciation is included as part of COGS and SG&A but only after the depreciation figure i... Thank you for your thoughts!
1) Actually, depreciation is projected and calculated on a standalone basis and then ALLOCATED to COGS and SG&A based on usage of the assets. Thus, on the IS, as you noted, depreciation is included as part of COGS and SG&A but only after the depreciation figure is known. This is what is done in the real world in the compilation of the financial statements as well as how we project it in the real world. Therefore, what we do in our training modules is not only very close to actual practice, it IS actual practice!

2) In the IS projection of COGS, we don't do a a full build-up of COGS because that requires access to non-public financial statements. In our Private Company - Pro Forma Modeling course, we dig into SG&A, but not COGS. This is because we are not provided internal budget numbers (non-public information) and also the COGS derivation is different for each sector and industry (and company). When we project detailed COGS on deals, we are provided with the non-public information from mgmt and we work off their methodology.

For instance, for a tire manufacturer, you want to split COGS out into two categories:
Raw Materials: rubber (natural & synthetic), galvanized steel (for strength), lubricants, carbon black (for friction), etc
Conversion: direct labor (usually measured in FTE cost), machinery, factories, utilities, rent, freight in (freight out is in SG&A), etc
You figure out how much of each component is required for x quantity of tires (i.e. for 2MM 20" tires, I need how much rubber, etc) and then roll-it up.
Note, that raw materials will tend to be a variable cost and conversion will tend to lean towards the fixed cost side with a variable component.

As such, once mgmt directly provides you with this level of information, it is not that difficult of an approach.

Let us know if you have more specific questions on COGS.

Thank you for your support of our product. Read More

RE: Merging Models into one Excel file
The short way is to select all of the tabs in 2009 and edit => move and select the 2008 file in "move to" and select the end or wherever to insert. You must have both files open first.

We'd recommend a full merge though - put 2009 in the columns after 2009.

RE: Fixing #VALUE errors in my model
You have an incorrect circular reference. When you switch the case back to 1 for beginning balance everything is fine because there are no circs. You'd have to painstakingly troubleshoot your model: turn off circs thru tools options calculation and uncheck iterations. Keep model on 1 and see if ... You have an incorrect circular reference. When you switch the case back to 1 for beginning balance everything is fine because there are no circs.

You'd have to painstakingly troubleshoot your model: turn off circs thru tools options calculation and uncheck iterations. Keep model on 1 and see if you have problems. If not then switch to 2 for average balance and if problems, delete the interest income and interest expense lines on IS. Just hit delete button, not cut or anything.

Then if still problems, you have to go and see the first point of errors. You shouldn't have errors on IS because you severed the link on the IS by deleting interest.

Look on BS and CF and debt to see where the problem is and trace it back. It might be a poor cell reference or a using wrong year or referencing a cell with text instead of numbers. Unfortunately you'd have to go one by one - there's no magic bullet to solve it. Read More