Posts by: WST Expert 1
Re: Replacement cost and earning power
the concept of replacement cost is trying to value a company based on how much it would cost to replace / replicate the operations/earnings. Thus, one method is to start by figuring out how much the PPE or factors of production to replace it's existing manufacturing capacity. That gives a baseline m... Read More
the concept of replacement cost is trying to value a company based on how much it would cost to replace / replicate the operations/earnings. Thus, one method is to start by figuring out how much the PPE or factors of production to replace it's existing manufacturing capacity. That gives a baseline m... Read More
Re: Basic Fundamental Knowledge
Glad you've been converted! In general, hitting ALT will access the menu items (ribbon in Excel 2007/2010) on the top. In a dialog box, hitting ALT+[letter] will access the item within the dialog box (called "accelerator key"). Excel has some basic CTRL+[letter] functions built-in, such ... Read More
Glad you've been converted! In general, hitting ALT will access the menu items (ribbon in Excel 2007/2010) on the top. In a dialog box, hitting ALT+[letter] will access the item within the dialog box (called "accelerator key"). Excel has some basic CTRL+[letter] functions built-in, such ... Read More
RE: WACC tax rate adjustment for bea
Individual marginal tax rate. Assuming normalized "regular" company, anywhere btwn 35% to 40% is fine.
Individual marginal tax rate. Assuming normalized "regular" company, anywhere btwn 35% to 40% is fine.
RE: Complex Trading: adj beta vs raw beta on bloomberg
Hi,
In the video, you explained that adj beta = 2/3*raw beta + 1/3 <- (1 * 1/3)
In the bloomberg screenshot for Walmart, however, I see this equation below the box:
ADJ BETA = 10.671 X RAW BETA + 10.331
How does this relate to the original equation you explained?
Thanks
Hi,
In the video, you explained that adj beta = 2/3*raw beta + 1/3 <- (1 * 1/3)
In the bloomberg screenshot for Walmart, however, I see this equation below the box:
ADJ BETA = 10.671 X RAW BETA + 10.331
How does this relate to the original equation you explained?
Thanks
Re: Advance Financial Modeling- Core Model Questions on CF
Correct. Using this year's EPS creates a circ because the amount of shares repurchased affects the new share count which is used to calculate that year's EPS, thus, a circ is created. Using trailing EPS solves this issue and since everything is an estimate anyway, you won't be wrong by that much.
Correct. Using this year's EPS creates a circ because the amount of shares repurchased affects the new share count which is used to calculate that year's EPS, thus, a circ is created. Using trailing EPS solves this issue and since everything is an estimate anyway, you won't be wrong by that much.
Re: Permutation
Yep, this is covered in our Portfolio Optimization & Efficient Frontier modeling Class. In short, here's the process: 1) use function =rand() to generate random numbers; notice this is a standard normal number between 0 and 1 indicating area under the curve 2) do that n number of times (assuming... Read More
Yep, this is covered in our Portfolio Optimization & Efficient Frontier modeling Class. In short, here's the process: 1) use function =rand() to generate random numbers; notice this is a standard normal number between 0 and 1 indicating area under the curve 2) do that n number of times (assuming... Read More
RE: DCF Valuation Date
Both are correct.
Do 12/31/07 because that's latest KNOWN actuals.
Do 6/30/08 for more "accuracy"; HOWEVER, that's why you build a model - so you know 6/30/08 estimated Net Debt!!!!!!!!!!! mis-match 6/30/08 DCF with 12/31/07 net debt - *head shaking*. YOU'RE FIRED!
Both are correct.
Do 12/31/07 because that's latest KNOWN actuals.
Do 6/30/08 for more "accuracy"; HOWEVER, that's why you build a model - so you know 6/30/08 estimated Net Debt!!!!!!!!!!! mis-match 6/30/08 DCF with 12/31/07 net debt - *head shaking*. YOU'RE FIRED!
RE: Is DCF a pre- or post-tax value?
Remember, with a DCF, you are attempting to map out future cash flows you receive. Thus, for the projection period, you receive FCFF which is indeed after tax, specifically taxes the corporation pays. For TV, while it is "pre-tax" since using EBITDA, if you were to sell the business, you would recei... Read More
Remember, with a DCF, you are attempting to map out future cash flows you receive. Thus, for the projection period, you receive FCFF which is indeed after tax, specifically taxes the corporation pays. For TV, while it is "pre-tax" since using EBITDA, if you were to sell the business, you would recei... Read More
RE: Complex Trading: Quick cost of debt question
Please refer to our Finance 101 video.
The cost of debt is supposed to be the marginal borrowing rate, which is proxied by the weighted average of current debt outstanding for that company.
Please refer to our Finance 101 video.
The cost of debt is supposed to be the marginal borrowing rate, which is proxied by the weighted average of current debt outstanding for that company.
Our accepted best practice is NOT to adjust Debt (whether Total or Net) for Working Capital as Working Capital is an operating related question not a capital structure, financing related item. Please note that that is in the context of STANDALONE valuation. The assumption is alwasy that there is eno... Our accepted best practice is NOT to adjust Debt (whether Total or Net) for Working Capital as Working Capital is an operating related question not a capital structure, financing related item. Please note that that is in the context of STANDALONE valuation. The assumption is alwasy that there is enough working capital because it is already in the business.
However, when structuring M&A transactions, you always have a minimum Working Capital level that is required in the business (otherwise that would be an additional capital outlay required by the Acquiror and thus, an increase to Transaction Value). In that case, a Working Capital adjustment (purchase price adjustment) is made at closing, but is not generally considered to be a part of Transaction Value.
Thus, especially if you are evaluating research analyst reports, in our view, it is incorrect to make an additional adjustment for Working Capital in a standalone valuation context. Read More