Posts by: WST Expert 1
Re: Treatment of Change in DAC in IS
DAC is a REDUCTION of expenses because of matching principle of accounting. Total commissions is calculated off the entire premium amount, of which a portion of that is not earned. Therefore, you have to REDUCE the commission expense associated with the unearned premium portion.
DAC is a REDUCTION of expenses because of matching principle of accounting. Total commissions is calculated off the entire premium amount, of which a portion of that is not earned. Therefore, you have to REDUCE the commission expense associated with the unearned premium portion.
Re: Overview of the Financial Markets
Wealth Management, while not as directly related to the markets as some other functions, could be considered very similar to the Asset Management side. For instance, WM comprises a substantial portion of demand for securities such as stocks, whether they're individual companies or sectors. Their cli... Read More
Wealth Management, while not as directly related to the markets as some other functions, could be considered very similar to the Asset Management side. For instance, WM comprises a substantial portion of demand for securities such as stocks, whether they're individual companies or sectors. Their cli... Read More
Re: Incorporating maintenance capex into free cash flow calc
What is the context? We do not encourage use of TEV/EBITDA-CapEx). Plain and simple, companies do not trade off that multiple. To answer your direct questions given our view as stated: 1) Yes, CapEx includes ALL CapEx in DCF 2) See our view above 3) D&A is a proxy for TOTAL CapEx ONLY for sl... Read More
What is the context? We do not encourage use of TEV/EBITDA-CapEx). Plain and simple, companies do not trade off that multiple. To answer your direct questions given our view as stated: 1) Yes, CapEx includes ALL CapEx in DCF 2) See our view above 3) D&A is a proxy for TOTAL CapEx ONLY for sl... Read More
Re: Stock rights offering
Rights shares are simply the ability to purchase shares at a discounted price. Once those rights expire (or more specifically, once the eligible shareholders are determined), they become ex-rights and as such price drops because theres was value there that is now defined and removed. So in essence, ... Read More
Rights shares are simply the ability to purchase shares at a discounted price. Once those rights expire (or more specifically, once the eligible shareholders are determined), they become ex-rights and as such price drops because theres was value there that is now defined and removed. So in essence, ... Read More
Re: capital lease in TEV
We would exclude capital leases from TEV calculations in vast majority of cases. Nuances are explained in the Private Company Valuation and Valuation Nuances course - so don't leave those exceptions out! In the cases of excluding capital leases from TEV, EBITDA does not need to be further adjuste... Read More
We would exclude capital leases from TEV calculations in vast majority of cases. Nuances are explained in the Private Company Valuation and Valuation Nuances course - so don't leave those exceptions out! In the cases of excluding capital leases from TEV, EBITDA does not need to be further adjuste... Read More
Re: Questions on the slides (8 questions)
1a) Typically you can find the marginal tax rate in the footnotes. 1b) MNC with various tax jurisdictions typically do get a bit complicated, but for companies such as Starbucks, which are based in the USA, and would likely issue debt in the USA and also trade on USA stock exchanges, we would use t... Read More
1a) Typically you can find the marginal tax rate in the footnotes. 1b) MNC with various tax jurisdictions typically do get a bit complicated, but for companies such as Starbucks, which are based in the USA, and would likely issue debt in the USA and also trade on USA stock exchanges, we would use t... Read More
Re: Questions on calculating items for multiples (9 questions)
1) Take Net Income from Continuing Operations AFTER Minority Interest, so INCLUDING the impact of MI. 2) No, EBITDA from Discontinued Operations is NOT in the "top half" of the Income Statement, it is lumped together in ONE line after NI. 3) In theory, the sell-side research analysts SHOULD be adj... Read More
1) Take Net Income from Continuing Operations AFTER Minority Interest, so INCLUDING the impact of MI. 2) No, EBITDA from Discontinued Operations is NOT in the "top half" of the Income Statement, it is lumped together in ONE line after NI. 3) In theory, the sell-side research analysts SHOULD be adj... Read More
Re: Other income
Correct. You have to read the footnotes (usually Footnote #1 for Accounting Principles) to see what's in Other Income respectively. In WMT's case, Other Income in Revenue is Sam's Club Membership Fee Revenue, so totally belongs under Revenue category. Never base a decision solely on the label, you H... Read More
Correct. You have to read the footnotes (usually Footnote #1 for Accounting Principles) to see what's in Other Income respectively. In WMT's case, Other Income in Revenue is Sam's Club Membership Fee Revenue, so totally belongs under Revenue category. Never base a decision solely on the label, you H... Read More
Re: Clarification on LIFO/FIFO adjustment & tax savings
We are lowering our income and EPS to adjust for FIFO to LIFO, hence we are adding 2.4*0.6. But keep in mind, the 2.4 is a NEGATIVE number from cell H48!!
We are lowering our income and EPS to adjust for FIFO to LIFO, hence we are adding 2.4*0.6. But keep in mind, the 2.4 is a NEGATIVE number from cell H48!!
Companies typically issue warrants as part of debt securities. This is meant to provide an "equity kicker", to increase the potential return to investors. Warrants do typically have a premium strike price over current price to align economic interests.