Re: Projected balance sheet challenge
No, if your BS doesn't balance, chances are it is because every item on the BS that is changing from year to year is probably not properly reflected on the CF statement. Here are the general steps to checking and troubleshooting your non-balancing model 1) Check all your subtotals and totals on the ... No, if your BS doesn't balance, chances are it is because every item on the BS that is changing from year to year is probably not properly reflected on the CF statement. Here are the general steps to checking and troubleshooting your non-balancing model
1) Check all your subtotals and totals on the BS are adding correctly.
2) Go thru the BS one line at a time and check that if the balance for that item changes in any year, that that change is reflected on the CF statement. If not, make sure you flow it through the CFS, similar to working capital items. You must continue to observe accounting rules and classify in the correct category
3) If all the line items on the BS are being reflected on the CFS, then check that you have the signs correct; for instance, that CapEx (cash flow) is properly increasing PPE. Many errors are due to wrong sign.
4) If all of that is still correct, then make sure your Debt sweep starting point (per our videos) are also correct
5) If none of that works, then see how much you are off by each year and try to see if you can spot a trend in check (or the change in the check each year) and see if it's double another number on the model to try to isolate what goes wrong.

Again, the key is, that for each item on the BS, it must be reflected on the CF somewhere!
If all else fails, contact us at info@wallst-training.com for private tutoring on your specific model! Read More

RE: Tax rate
Back to tax rates again - you could have used the statutory tax rate of 35% but we decided to use 40% for ALL adjustments and so we chose to be consistent. If there is a significant difference between the rates, then you would have to pick the marginal rate, per your previous question.

Re: taxes
That is correct. This is consistent with GAAP accounting and reconciliation to "cash taxes". In addition, GAAP taxes would show "Current" and "Deferred". In our tax schedule build-up, the amount you pay the IRS is "Current" and "Deferred" is the diff... That is correct.
This is consistent with GAAP accounting and reconciliation to "cash taxes".
In addition, GAAP taxes would show "Current" and "Deferred".
In our tax schedule build-up, the amount you pay the IRS is "Current" and "Deferred" is the difference between GAAP taxes and "Current". Deferred could be either direction (positive or negative) depending on that period's net change in DTA and DTL. Read More

RE: Corporate Valuation Methodologies: capital lease
Correct points and observations but operating leases are also tax deductible. Of course there is the whole timing difference of depreciation and interest but putting that aside, the more significant figure is the entire amount that is off balance sheet vs on balance sheet. Keep in mind rating agneci... Correct points and observations but operating leases are also tax deductible. Of course there is the whole timing difference of depreciation and interest but putting that aside, the more significant figure is the entire amount that is off balance sheet vs on balance sheet. Keep in mind rating agnecies always add back leases, both operating and capital. Read More

RE: Why is minority interest NOT included in M&A analysis?
Minority Interest: when you buy a company, you don't pay for MI because you aren't buying out the minority shareholders. For standalone Enterprise Value Value calculations, you include it because 100% of the subsidiary is on your books. The Enterprise Value includes the effect of 100% of the consoli... Minority Interest: when you buy a company, you don't pay for MI because you aren't buying out the minority shareholders. For standalone Enterprise Value Value calculations, you include it because 100% of the subsidiary is on your books. The Enterprise Value includes the effect of 100% of the consolidated earnings. Read More