Posts by: WST Expert 1
RE: WACC - preferred debt tax deductibility & levered beta
1) Unlevered beta evaluates the relationship between debt and equity. Total Enterprise Value (TEV) is a valuation-based metric that is not meant for the levering/unlevering of betas. This is straight from the academic world, Hermada beta. 2) Most of the time, preferred debt is not tax deductible ... Read More
1) Unlevered beta evaluates the relationship between debt and equity. Total Enterprise Value (TEV) is a valuation-based metric that is not meant for the levering/unlevering of betas. This is straight from the academic world, Hermada beta. 2) Most of the time, preferred debt is not tax deductible ... Read More
RE: Leveraged Buyout Overview: about goodwill
You are absolutely correct - you are thinking about FMV step-up in which you step up the assets of the Target Company to "fair market value", in particular, SFAS 141/142 and IFRS 3. In our model, we currently assume for arguments sake that there is no FMV step-up which primarily only affects Invento... Read More
You are absolutely correct - you are thinking about FMV step-up in which you step up the assets of the Target Company to "fair market value", in particular, SFAS 141/142 and IFRS 3. In our model, we currently assume for arguments sake that there is no FMV step-up which primarily only affects Invento... Read More
Re: Core Model DCF - terminal cashflow
We can agree to disagree. However, note that if the Tax-Effected EBIT is much larger than FCFF then technically speaking, the perpetual growth method really shouldn't apply since it hasn't reached "run-rate" slow growth mode yet. We stand by our position that slow growth companies should ... Read More
We can agree to disagree. However, note that if the Tax-Effected EBIT is much larger than FCFF then technically speaking, the perpetual growth method really shouldn't apply since it hasn't reached "run-rate" slow growth mode yet. We stand by our position that slow growth companies should ... Read More
Re: Enterprise Value Formula
There is always a component of cash that cannot be used that is for working capital purposes. The true definition of excess cash is the total Cash & Equivalents (usually including Short-Term investments as well) and then subtract this required amount. The excess (the difference) is the Excess C... Read More
There is always a component of cash that cannot be used that is for working capital purposes. The true definition of excess cash is the total Cash & Equivalents (usually including Short-Term investments as well) and then subtract this required amount. The excess (the difference) is the Excess C... Read More
RE: WACC: market vs book value & what regulated industries?
1) In theory, WACC should always be calculated using the market value of equity and debt to determine the weightings for each. However, it is common practice sometimes for ongoing, going-concern, run-rate, non-distressed companies to use market value of equity and book value of debt, the rationale b... Read More
1) In theory, WACC should always be calculated using the market value of equity and debt to determine the weightings for each. However, it is common practice sometimes for ongoing, going-concern, run-rate, non-distressed companies to use market value of equity and book value of debt, the rationale b... Read More
Re: Options Exerciseable versus Outstanding - Complex LBO
Options Outstanding: all options issued but not necessarily vested. this can include both in-the-money and out-of-the-money options Options Exercisable: options that are vested as of now. this can include both in-the-money and out-of-the-money options all options outstanding usually vest upon a cha... Read More
Options Outstanding: all options issued but not necessarily vested. this can include both in-the-money and out-of-the-money options Options Exercisable: options that are vested as of now. this can include both in-the-money and out-of-the-money options all options outstanding usually vest upon a cha... Read More
Re: IRR>WACC, chose this project?
Is the WACC the company WACC or project WACC?
Many potential reasons:
1) market share grab
2) acquire customer lists
3) branding
4) loss leader for other projects
5) other strategic reasons
Is the WACC the company WACC or project WACC?
Many potential reasons:
1) market share grab
2) acquire customer lists
3) branding
4) loss leader for other projects
5) other strategic reasons
RE: Diluted shares vs basic shares for WACC
yes - since WACC uses market value of equity, and equity value is always calculated off diluted shares outstanding, it would be accurate to use diluted shares and not basic.
yes - since WACC uses market value of equity, and equity value is always calculated off diluted shares outstanding, it would be accurate to use diluted shares and not basic.
RE: Quick & Dirty Basic LBO Model: Modeling Private Cos
The ramifications for a private company vs a public company are very similar - the major difference is that there is no EPS and Shares Outstanding. Thus, to "fudge it", you could assume that there is one Share Outstanding or, better yet, to be more precise, you would use Net Income => so instead ... Read More
The ramifications for a private company vs a public company are very similar - the major difference is that there is no EPS and Shares Outstanding. Thus, to "fudge it", you could assume that there is one Share Outstanding or, better yet, to be more precise, you would use Net Income => so instead ... Read More
You cannot do an averageif with arrays. you would have to use a SUM+IF condition and then divide by COUNT+IF condition. the reason is that averageif will put in zeros when the condition is not met and the average will include the zeros.