RE: Tangible Book Value for Insurance Companies
Well the definition of TBV is book less intangibles. Traditionally that obviously doesn't include a prepaid asset like prepaid rent for instance. So don't minus out the DAC. Remember DAC is purely a GAAP term. Note however that a common valuation metric is price / premiums sort of like enterpris... Well the definition of TBV is book less intangibles. Traditionally that obviously doesn't include a prepaid asset like prepaid rent for instance. So don't minus out the DAC. Remember DAC is purely a GAAP term.

Note however that a common valuation metric is price / premiums sort of like enterprise vale/revenue. Then insurance companies have a premium/surplus restriction. Thus an implied price/ surplus ratio. That surplus is indeed closer to book value less tangibles less DAC and other smaller (usually insignificant items) and so in short, both methods are not unreasonable, just use the right terminology then you are fine. Any shortfall in capital or surplus is reduced one for one in value, not multiplied. Read More

Re: Hospital Model
Unfortunately at this time, we don't have a training module on hospitals.

Re: LBO "Super Complex Course"
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RE: Effective vs marginal tax rate for FCFF
if the marginal tax rate and the effective tax rate are similar, it really doesn't matter. normally it is marginal tax rate for everything, however, b/c this isn't an "incremental" analysis (like a merger), effective tax rate is preferred for FCFF calculations. cash taxes is the term used to ind... if the marginal tax rate and the effective tax rate are similar, it really doesn't matter. normally it is marginal tax rate for everything, however, b/c this isn't an "incremental" analysis (like a merger), effective tax rate is preferred for FCFF calculations.

cash taxes is the term used to indicate taxes paid on EBIT, as if there were no interest, not to be confused with actual taxes paid in cash. agreed that the terminology sounds misleading or is implies more than meets the eye, but don't overthink it! Read More

Re: Cash Circular
It doesn't count if you're on the first floor or have a balcony right underneath you! However, in all seriousness, we do not advocate jumping out of windows. So, we've got good news and bad news for you. Which do you want first? Always the bad of course. Bad news is that one can have a circular ref... It doesn't count if you're on the first floor or have a balcony right underneath you!
However, in all seriousness, we do not advocate jumping out of windows.

So, we've got good news and bad news for you.
Which do you want first? Always the bad of course.
Bad news is that one can have a circular reference for a gazillion reasons, most of them all silly mistakes.

Good news is - based on the information you provided, we can EASILY spot the mistake. If it turns out that you "mistyped" then don't blame our lifetime support!

You mentioned that your interest expense is calc'ed off your Ending balance. This is not correct. It should be off your Average balance. In class, we teach you to toggle between Beginning Balance, which should remove the circ. A circ should only be created when you toggle to Average balance. And of course, this applies to both interest expense and interest income.

So, please try this: calc your interest expense and interest income off of beginning debt and beginning cash balance, respectively. Circ should be gone right away. If not, then your circ problem is due to SOMETHING ELSE in the model. But at least you would have removed this particular faulty circ logic. And obviously, it would be that current year's beginning balance and don't forget to Ctrl+R and propagate across when making corrections.

If this solves your problem, then please save us a drink.
If not, you'll need to tell us more information and you should have another drink. Read More