Posts by: WST Expert 1
RE: Is DCF a pre- or post-tax value?
Bingo. Remember our wmt discussion (via online I think) where perpetuity wasn't a great approach for wmt b/c capex didn't equal depreciation at all so not applicable since not at "true" steady growth run-rate. But u still need to run the numbers to validate or provide reason for non-importance. Also... Read More
Bingo. Remember our wmt discussion (via online I think) where perpetuity wasn't a great approach for wmt b/c capex didn't equal depreciation at all so not applicable since not at "true" steady growth run-rate. But u still need to run the numbers to validate or provide reason for non-importance. Also... Read More
RE: Why is there a holding company discount?
Short Answer: Corporate overhead allocation and inefficiencies. Longer Answer: Clearly, conglomerates exist under the context of "economies of scale" (increased purchasing power, lower cost of capital, etc) but there is a cost to coordinating all the activities. "Sum-of-the-parts" valuation many... Read More
Short Answer: Corporate overhead allocation and inefficiencies. Longer Answer: Clearly, conglomerates exist under the context of "economies of scale" (increased purchasing power, lower cost of capital, etc) but there is a cost to coordinating all the activities. "Sum-of-the-parts" valuation many... Read More
RE: TEV and negative net debt clarification
When we have more time in our longer courses, we go thru this simple explanation: If I buy your company for $100MM and there is $10MM of excess cash on the books, and you aren't allowed to touch it b/c you sold it to me, I have effectively paid a total of $100MM less $10MM b/c I take the cash and... Read More
When we have more time in our longer courses, we go thru this simple explanation: If I buy your company for $100MM and there is $10MM of excess cash on the books, and you aren't allowed to touch it b/c you sold it to me, I have effectively paid a total of $100MM less $10MM b/c I take the cash and... Read More
RE: Stock-Based Comp adjustment
Your asssessment is correct; however, if you never tell excel that stock-based comp is non-cash, IE, you embed within SG&A as it is most likely done as reported on 10Ks, then you don't have to make the adjustment. The incremental precision gained by modeling out stock-based comp and any option e... Read More
Your asssessment is correct; however, if you never tell excel that stock-based comp is non-cash, IE, you embed within SG&A as it is most likely done as reported on 10Ks, then you don't have to make the adjustment. The incremental precision gained by modeling out stock-based comp and any option e... Read More
Re: The Financial Modeling Process
You must complete the debt sweep first, then calculate you're interest expense/income. It will be the last step in the model. At that point all the numbers should tie. Recall that when first constructing the IS, interest expense/income are left blank. THEN that is the very LAST thing you do AFTER f... Read More
You must complete the debt sweep first, then calculate you're interest expense/income. It will be the last step in the model. At that point all the numbers should tie. Recall that when first constructing the IS, interest expense/income are left blank. THEN that is the very LAST thing you do AFTER f... Read More
RE: Mechanics of FCFF calculation
Yes, FCFF can be calculated for any time period. however, for purposes of DCF, you would want to calculate projected FCFF. Note that you don't necessarily have to have a complete financial model to do so - you can still estimate it by assuming growth rates on last known historical figures. There ... Read More
Yes, FCFF can be calculated for any time period. however, for purposes of DCF, you would want to calculate projected FCFF. Note that you don't necessarily have to have a complete financial model to do so - you can still estimate it by assuming growth rates on last known historical figures. There ... Read More
RE: General Inquiry
Unfortunately we do not allow editing of our macros as they are copyrighted. You would have to build a separate set of macros for your purpose. We constantly update our macros and it would be difficult to maintain all the different versions. Any customization would incur fees.absent a custom bui... Read More
Unfortunately we do not allow editing of our macros as they are copyrighted. You would have to build a separate set of macros for your purpose. We constantly update our macros and it would be difficult to maintain all the different versions. Any customization would incur fees.absent a custom bui... Read More
RE: How do convertible bonds affect total capitalization?
Yes, the TEV effectively increases as presumably, the post-conversion captial structure has more equity due to dilution. That's on the market value side. On the balance side side, correct, remove converts from debt as before and increase book value by the converted amt (shares * price /share). Howev... Read More
Yes, the TEV effectively increases as presumably, the post-conversion captial structure has more equity due to dilution. That's on the market value side. On the balance side side, correct, remove converts from debt as before and increase book value by the converted amt (shares * price /share). Howev... Read More
Re: Factoring subsidies into WACC
This is an interesting question that begs of the purpose of WACC. If the government subsidy is permanent - as in, it is GUARANTEED that they will ALWAYS receive it, then you can consider it to be permanent and you would alter WACC as follows: $150 total: $45 Gov't @ 0% cost of capital $73.5 debt @ ... Read More
This is an interesting question that begs of the purpose of WACC. If the government subsidy is permanent - as in, it is GUARANTEED that they will ALWAYS receive it, then you can consider it to be permanent and you would alter WACC as follows: $150 total: $45 Gov't @ 0% cost of capital $73.5 debt @ ... Read More
Normally speaking, TEV focuses only on capital structure and "sources of funds". In other words, it focuses on valuation of entities. However, your question focuses on a "working capital", "day-to-day operations" of the company as opposed to capital structure. Thus, without knowing more about the sp... Normally speaking, TEV focuses only on capital structure and "sources of funds". In other words, it focuses on valuation of entities. However, your question focuses on a "working capital", "day-to-day operations" of the company as opposed to capital structure. Thus, without knowing more about the specific industry or company in question, our initial gut feeling is to do nothing to your equation for TEV and Equity value, in other woreds, don't adjust either for the Deferred Maintenance Revenues. Read More