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Discount rate unwinding
When i do a DCF model and used a discount rate of 15%, I generated an equity value say 100 dollars. As we move into next year, I need to adjust my discount factor, making year 1 into year 0, my equity value will be increase to 113. My question is how come my equity value is 115, shouldn't my equit... Read More
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added 4 months ago
Beta for Cost of Equity
Hello WST, I understand that many have access to Bloomberg terminal at work or in school so getting beta for a particular stock is not an issue. However, would you have any recommendation for those who don't have Bloomberg and need beta to calculate cost of equity for a particular company? For ex... Read More
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added 7 months ago
DCF Mid-Year Convention
Hello WST,
A quick question, would you recommend using mid-year convention for DCF because obviously firms don't normally receive all its cash at the end of the fiscal year? Many thanks.
DCF Correct Time Period inputs
Hi WST, I have a not so smart question, let's say I am making a 5 year projection (2018-2022) for DCF analysis to calculate a company's implied stock price. Now, the company just releases its latest financial statements. So should I use the latest financial figures to calculate, say, net debt, an... Read More
Warrants
Why do companies issue warrants? Do warrants usually have a premium price over the current market value? if yes, why is that?
Stock rights offering
Why is that the stock price normally gap down after ex rights date? What seems to be the logical reason for the price adjustments?
Hedging Instruments and TEV
Hi, is there ever a case when you would add/subtract the fair value of hedging instruments when getting to enterprise value from equity value?
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added 2 years ago
Question on interest income impact on FCFE and valuation
I have this company with no debt and high cash pile. (1) In the FCFE calculation = FCFF - (int x (1-tax)) + net borrowing; I will need to add back interest expense * (1-tax). But in my Co case with high cash pile, do i add back interest income instead? (2) when determining the value per shar... Read More
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added 2 years ago
Accounting question on
A company invest in a target and obtain 40% stake for 120mn. So the target is valued at 300mn. 6 months later, the company is increasing its stake in the target from 40% to 60%. The announcement read: "The increased stake will take effect following a share capital increase, whi... Read More
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added 2 years ago
Free Cash Flow to Equity
Would increase in debt (refinancing) in a year increase free cash flow to equity in that year?
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added 2 years ago
Seasonal Working Capital
How should a working capital target be chosen for a business that has seasonal net working capital (for example, every year a company must build up inventory and its suppliers do not take credit, or bonuses for employees are paid at the end of each fiscal year). From what I have seen, many practitio... Read More
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added 2 years ago
FCFF - Unlevered Free Cash Flow
Hi, I took a class last time regarding corporate valuation and there was a discussion on calculating unlevered free cash flow, where we deduct capex (and we do not add borrowing for that year). What should we do if the company borrowed a huge amount of cash for capex that year? Should we really have... Read More
FCFF (Unlevered Free Cash Flow)
Hi, when calculating unlevered free Cash Flow, we are deducting capex from the cash flow of the company, but net borrowing is not added. What if the company borrowed money to finance the capex? so for valuation purposes, for that year, FCFF will be negative. Is there a way to correct for it? Thanks... Read More
Exit Transaction Fees & IRR/MOIC
When doing an LBO model, if you assume a certain amount of transaction fees the sponsor will have to pay at exit, should you account for these in the MOIC/IRR that you calculate in your LBO analysis?

Thanks for the help!
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added 2 years ago
Beta Benchmark - Canada vs US
I've seen some beta benchmark questions here, but just to be explicit: if there is a mix of US and Canadian companies, do I benchmark the Canadian off of SPTSX or SPX? Thank you!
IPO Valuation
I am trying to value a company for an IPO (proceeds strictly used for expansion, not for the existing shareholders to exit), using DCF (on the FCFF). I have done financial forecast on the company, taking into account the improved performance after it receives new capital from the IPO. After I deriv... Read More
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added 3 years ago
TEV and ¨significant¨Cap/Op Leases
Love the videos! Could you provide some additional clarity to the airline/truck/rail exception for calculation of TEV in the Op/Cap Lease context? I can think of many industries/companies, outside of the three exceptions given, that pay significant amounts (depending on your definition/thresholds) f... Read More
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added 3 years ago
Ibbotson Equity Risk Premium
Understood in the class that Ibbotson's sheet on Equity Risk Premium (ERP) will be made available in the Forum, may I know how can I find it please? Thanks.
If whole sheet cannot be shared, may I know the latest ERP (2017) for Philippines please?
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added 3 years ago
BS line item treatment for determining TEV
If a company lists restricted cash not for working capital purposes, but instead for covenants adherence, would you be allowed to subtract it in the TEV like normal cash? Also, what is the difference between Investment in Unconsolidated Affairs (asset side) versus minority interest (on the liability... Read More
Mutual Fund Taxes
If you're invested in a mutual fund, how does the rate at which the mutual fund churns affect your taxes? In other words, when paying taxes on a mutual fund, does it matter how long you've been invested in the fund (more than a year and you're taxed at capital gains rate instead of ordinary income t... Read More
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added 3 years ago
Diluted Shares Outstanding - Market Cap
Hi, would you ever measure market cap using the current share price and the treasury method (but using options outstanding instead of options exercisable)?
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added 3 years ago
Two different NPV
I have tried to reconcile two methods to calculate the NPV of a project. In theory, both should normally lead to the same result. However I have obtain two different outcomes. I am looking at a project which is 100% debt finance. Loan principal repayment is made quarterly. At the end of the investm... Read More
Perpetuity Growth Method
Why do we use tax effected EBIT instead of using unlevered free cash flow to calculate TEV when trying to back solve implied ebitda multiple in a DCF? Thank you
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added 3 years ago
Crude Inventory Product Financing Arrangement
In a product financing arrangement with a crude trader, there is a free 30-day and another extended credit 30-day to match the inventory cycle of 60 days. The first 30-day is free while the last-30 days is not. So the last 30-day is an interest-bearing payable. Economically and legally, the trader s... Read More
Gain/Loss on Derivative for Oil & Gas Company
For oil and gas companies, should we not adjust out gains/losses on derivatives that are used for hedging purposes given that such companies engage in such transactions consistently?
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added 4 years ago
TEV
Is this a good formula? Cash or Normal net working capital + Enterprise Value + Non-operating assets = Long-term liabilities or long-term Debt + Minority Interest + Equity + Non-operating liabilities + unfunded pension liabilities + preferred shares wherein: "Normal" net working capital = Curren... Read More
Growth Rate Math
Hi there, if a company is trading at 20x forward earnings projections, and if one assumes a post-growth ("terminal") earnings multiple of 15x and a required rate of return of 7.5%. How do you determine the implied 5 year growth rate??
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added 4 years ago
Capital Lease Discussion
Hi, I have read through the capital explanations but am still somewhat confused. Why do we not include capital leases as a form of debt? From what I read, you said "Capital leases are capital leases b/c the accountants said so. Else they would be operating leases and off-balance sheet." By this, do ... Read More
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added 4 years ago
Comparable companies analysis
My subject company is a private one going to IPO. Let's say I have concluded the industry average P/E and am going to calculate subject company's implied market cap. Is this market cap considered pre-money or post-money? Because if that is a post-money market cap a.k.a. enlarged share capital, the o... Read More
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added 4 years ago
Equity value derived from DCF
At the end of DCF model, when I have the implied enterprise value, deduct net debt and finally get an equity value, is this considered a pre-money equity value? Should I add back IPO offer size to get a post-money equity value?
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added 4 years ago
WACC
1. When calculating cost of equity (in order to derive WACC) by CAPM, which country's risk free rate and market risk premium should be adopted? Let's say it's a Korean company doing most of its business in Korea, going to list in HK, but reporting currency is USD... 2. Following last question, whe... Read More
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added 4 years ago
EV/EBITDA vs. P/E
Why can't EV/EBITDA multiples be higher than P/E multiples?
Derivative Assets for E&P Companies
When modeling an E&P company and the derivative assets listed on the balance sheet are expected to be monetized in the projection period, do we decrease the derivative asset balance to zero and run the figure through the income statement for the related period? And then project zero for the derivat... Read More
Cash
Do we separate cash into operating cash or excess cash? or treat all cash as excess cash?
Risk Free Rate (what to use)
Often times, we are asked to use a risk free rate for the CAPM. I have always been told to use the 10 year Treasury bond for the RFR, what is the proper rate to use and why?
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added 5 years ago
One time items?
There are a few items that I've been seeing on the income statement that I am trying to determine whether it should be removed for the purpose of calculating a normalized EBITDA, can you please explain why some of these items should or should not be included? FX Gains/Losses Gain/Loss on sale of... Read More
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added 5 years ago
Capital and Operating Leases
I am curious if you guys have an opinion on leases and there role in valuation: Do you make adjustments for op leases in EV for multiples? Do they make an impact on your comparison to other similar companies that use cap leases instead? Do you count them in EV in general? Thank you.
Weighting trading multiples
I am currently looking at a public company that focuses on a very nice area where there aren't a lot of other public companies that do the same thing as their core business. I'm able to only generate two companies and would like to ideally include five. I have added 3 other comps that have a small p... Read More
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added 5 years ago
Target D/E Ratio for WACC
Without asking company management, how do you determine the optimal D/E ratio for the purpose of calculating weights for the WACC?
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added 5 years ago
Target D/E ratio for WACC
Without having to ask management, how do you determine the optimal D/E (D/A or E/A) ratio for calculating a company's WACC?
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added 5 years ago
Restricted Stock Units/Equity Compensation Plans
Should RSUs be treated the same way as options outstanding when it comes to calculating diluted shares outstanding? If so, should we look at the "Granted", "Vested," "Forfeited/Cancelled" or "Nonvested" (ending balance). Also do we use the "Weighted Average Grant Date Fair Value" for exercise price... Read More
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added 5 years ago
Selling Receivables
I have a question regarding adjustments to EV/EBITDA when a Company sells receivables. The following is the scenario, There are three comps that you're evaulating EV/EBITDA. Two of the companies have 20m in cash on their B/S and does not sell their receivables for financing reasons. The third com... Read More
Forecasting Tax Rate
How would you forecast the tax rate for a company? For example, if the statutory tax rate was 40% for the last three years, and the effective tax rate for the last three years were 20, 21,22% What tax rate would you use in your forecast and why? Can someone please explain this to me, perhaps usin... Read More
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added 5 years ago
Ref Range Issues
My company is basically without a direct comp. It sits between movie theatres and studios. I have 4 comps and will add another. All data used were taken from CapIQ. Per Public Comps, all but one of the calculations (Forward EPS*2014E) yields values that are all over the place and, in some cases, ... Read More
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added 5 years ago
Multiples
This thread should be much shorter than the last . . . I have a transaction (intrinsic value) model going on here. I've used annual, historical data exclusively (2011, 2012, 2013). My first forecast year is 2014. The company reported 1Q14, so LTM data exists. I need to use multiples for my ref ra... Read More
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added 5 years ago
Treatment of Revolver as Debt for TEV
I wanted to ask your view on a discussion we had here at the firm. The topic was how to calculate the Net Debt of a company for the purpose of subtracting it to the enterprise value and getting to a purchase price. The firm is a small growing company with approximately 1.6m in Accounts Receivabl... Read More
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added 5 years ago
Very quick question
I know this isn't your specialty, but what major database do the majority of the banks use for Transactions Comps? ie. CapitalIq, Thomson SDC, etc? If a company were to subscribe to one what would you choose?
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added 5 years ago
Convertible Debt Adjustment
In the Complex Trading Comps example, Costco has zero-coupon convertible subordinated notes due in 2017 with face value of $900M and a max shares convertible of 9.4M. However, in the 10-K it clearly says that $329.M in principal amount has already been adjusted, yet in explaining how to account for ... Read More
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added 5 years ago
startups
Can you provide some guidance on valuing startups?
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added 5 years ago
FCFF calculation & WACC
Hi Guys, I have a few questions that i would like your opinion on. 1. On the DCF Analysis we calculate NOPAT after we subtract from EBIT the Cash Taxes (i.e NOPAT=EBITx(1-Tax rate)). Now let's assume that the company has retained losses carried forwmard which will not turn positive for the 5... Read More
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added 5 years ago
R&D Expense and Capital
Hi WST, I am analyzing an ODM TECHNOLOGY company and trying to build an integrated projection. From reviewing its financial reports, it has, say, $8m of R&D expenses on the income statement and $12m of investment cash outflow of Product Development; it also has an intangible asset account for P... Read More
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added 5 years ago
Deferred Maintenance Revenue treatment for TEV
I have a question regarding how to treat Deferred Maintenance Revenues relating to maintenance fees earned by a company for software licenses in terms of calculating the Equity Value of a Company.  Normally, the Equity Value = TEV + Cash less Debt.  However, should the Deferred Maintanence Revenue... Read More
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added 5 years ago
DCF - FCFF time horizon and excluding Terminal Value
I am working on FCFF and I have wondering if we take a longer period and don’t include the Terminal Value for future calculation and discount it back, is that correct method? As we know that most of the value come from the TV, the stock price is too high, is that appreciate to do it like that.
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added 5 years ago
Is DCF a pre- or post-tax value?
Does the dcf generate a pre or post tax value? Clearly after tax, because you use nopat in the interim years.

But if you use the terminal mutiple approach, you're not tax effecting ebitda, so isn't that apples to oranges, ie when comparing after tax interim fcf vs. Pre tax terminal value?
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added 5 years ago
DCF Valuation Date
Lets say you’re doing a DCF of a target company, to calculate standalone equity value per share by taking DCF EV minus net debt, divide by S/O. Let’s say the latest net debt info you have is as of 12/31/07 10K. But, we’re past 12/31/07. it’s already late February. The transaction would b... Read More
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added 5 years ago
WACC tax rate adjustment for bea
Hey Hamilton, got a quick theoretical question for you re the WACC and delevering beta: is there any theoretical defense for assuming that all of the comps’ betas get delivered assuming a standard 35% tax rate? Or do you have to delever comps’ betas using each company’s individual tax rate? I... Read More
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added 5 years ago
Net Debt and Working Capital
Net debt includes all debt - short and long-term less excess cash. The revolver is often an operating line secured by accounts receivable. I have seen analysts calculate net debt as long-term debt net of working capital surplus/deficiency. Is this correct? When I want to use an EBITDA multiple ... Read More
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added 5 years ago
Free Cash Flow Tax Adjustment for Depreciation
When estimating free cash flows for a valuation, every reference I have explains to add back depreciation & amortization to NOPAT.  I know that this is because the D&A cash flows are only book implied.  However, at what point do you adjust cash flows for the real effect of the tax shield t... Read More
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added 5 years ago
Original Issuer Discount
Got a quick question for you re OID: am I correct to assume that it works as follows: I borrow $100 from the bank (with a 5 year maturity), but it has a 25% OID. So, I only get $75 in cash. So, my balance sheet would show: 75 increase to cash, 100 debt liability, and 25 current asset of OID. Let'... Read More
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added 5 years ago
TEV and negative net debt clarification
I attended both the morning and afternoon sessions yesterday in Chicago.  I was reviewing the work we did later in the evening and noticed that two of the retailers used in the template had negative net debt.  This resulted in a TEV which was less than the equity value of the company.  What is th... Read More
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added 5 years ago
Diluted Shares Outstanding for Equity Value
I have got a question related to Diluted Shares Outstanding that you may be able to help me with. Why should we include the diluted figures when calculating Market Equity Value for Trading Multiples analysis? Because my interpretation is that when these options or covertibles were excercised the... Read More
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added 5 years ago
Levered vs. unlevered beta for cost of equity
My question relates to the appropriate use of levered vs. unlevered beta in deriving the cost of equity in a free cash flow to the firm and free cash flow to equity analysis. I have read conflicting information on the subject. Is it appropriate to use unlevered beta to calculate the cost of ... Read More
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added 5 years ago
Deferred Acquisition Costs for Life Insurance Companies
I am trying to value diversified insurance companies using market multiples. When you have the "amortization of deferred policy acquisition costs" for life insurers, should I treat it as a cash expense, not as a non-cash amortization charge it ostensibly is? This issues arises becuz we're compa... Read More
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added 5 years ago
Forex Gains (losses)
Hi WST, I understand that if, say, a US company with functional currency of USD and issues debt denominated in a foreign currency then each quarter the company will need to adjust the debt with foreign currency exchange gains (losses) on the balance sheet and income statement. Now, I am curious if ... Read More
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added 5 years ago
Correct benchmark for beta
I'm a buy-side equity analyst at a European bank that has an equity portfolio of only euro zone stocks. In my valuation models, namely discounted cash flows, to arrive the WACC of a specific stock I use the Beta of the stock versus a European benchmark (I use Dow Jones Eurostoxx 50 index) with daily... Read More
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added 5 years ago
Effective vs marginal tax rate for FCFF
I have taken the on-line courses (Advanced Fin model - core model and the enhancements) and I still have a doubt that you may be able to help me with: - Not specifically talking about our case (WMT) but: Should anyone use the effective tax rate to calculate the tax-effected EBIT when calculating... Read More
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added 5 years ago
WACC of a private company?
Hi WST, I understand that in calculating WACC, we should use the "market" value of equity and debt of an enterprise to derive the % of equity and debt weight. However, what happens if the enterprise is a private company; then, where can we obtain the proper % of equity and debt weight for the priva... Read More
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added 5 years ago
Stock Based Compensation
I have some questions relating to stock based compensation expense. I am doing a valuation of a company using DCF and Comparable Company analyses and SBC expense has raised its ugly head. For our comparable company analysis, while all analysts seem to be submitting their EPS figures on a GAAP bas... Read More
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added 5 years ago
Tangible Book Value for Insurance Companies
We're calculating the multiples of the public companies (in 1986) so that we can select a multiple for our subject company (private). In that case, I've been told that the multiple to use is the Tangible BV. In other words, BV minus intangible assets minus DPAC. However, this DPAC is such a large... Read More
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added 5 years ago
CAPM alpha risk
Should we include alpha risk in calculating CAPM? If, yes, what should be included?
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added 5 years ago
Correct Net Debt for TEV
First of all I would like to thank for a great website for learning. I have problem in defining net debt thereby getting a true value of TEV. I have found and heard many definitions of net debt, these are some of them: a) interest-bearing debt less cash & cash eq b) LTL + short... Read More
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added 5 years ago
Adjusting historical financials for non-recurring/XO items
I have a technical question related to the impact on taxes when adjusting historical financials for non-recurring/extraordinary items that you may be able to help me with. Let’s take a generic example: EBIT => $ 300 Interest => ($ 1000) Pre-Tax income => ($ 700) Taxes => $ 200 ... Read More
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added 5 years ago
DCF Terminal Value Discount Period
Hope you’re well. got a technical question for you: re the DCF: should the terminal value as per perpetuity growth rate method be discounted back at the same time period as the terminal multiple approach? Ie, doesn’t FCF * (1+g) / (r-g) = present value of terminal value, as of 1 year after the ... Read More
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added 5 years ago
Reference Range (Corporate Valuation)
Hi,

In the Reference Range sheet, how are the reference ranges be calculated? However, I understand how I can calculate each implied enterprise value, implied equity value and implied price per share.
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added 5 years ago
Valuation of fair market value of debt converting to equity
Question.... How do you fair maket value debt that is converting to equity post a bankruptcy? Meaning, the senior lenders are goign to have all of the equity post restructuring and you're trying to figure out the value of the equity day 1 of chapter 11 emergence... Here's what I know so far.. (... Read More
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added 5 years ago
Oil and Gas Valuation
Ware there any rules of thumbs for valuing oil and gas reserves in the ground on both P1, P2 and P3 bases? Such that there are 100m barrles in the ground, what is it worth? Are assumptions made on how is extractabel etc? Same things for gas. Would appreicate a rule of thumb as well as overview ... Read More
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added 5 years ago
Tax expense for terminal year
Hi WST, If a company enjoys a tax reduction for whatever the reason for, say, our project years (5 years). Should we adjust the terminal year tax expense to the normal level in order to obtain the correct terminal value? EX, the effective tax rate for t+1 till t+5 would be 10%; however, it would ... Read More
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added 5 years ago
A quick question about TEV
In advanced modeling session, Hamilton uses tax-effected EBIT, instead of Free cash flow to firm, to calculate terminal enterprise value (TEV=EBIT(1-tax rate)(1+g)/(WACC-g), but almost all texts use FCFF in numerator). Given EBIT not including capx or working capital, how would this argument be ju... Read More
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added 5 years ago
Why is minority interest NOT included in M&A analysis?
Full Question:
I believe you characterized minority interest as a quasi-financing for earnings (which seems similar to interest-bearing debt). Therefore, it would seem that I should include minority interest in my enterprise value calculation.
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added 5 years ago
Please elaborate why cash is deducted from enterprise value.
Full Question:
Please elaborate why cash is deducted from enterprise value. I always have performed this calculation because I presume the acquiror will use the cash to finance the deal.
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added 5 years ago
Corporate Valuation: Nuances on these methodologies
Hi there, I have a couple of doubts in relation to this module: (1). Could you please explain in more detail why capital leases are excluded (I watched that part twice and didn't really get it)? If we had a leasing finance (a credit line w/ a commercial bank) would we include it in the EV calc... Read More
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added 5 years ago
Goodwill
Hi WST,
Quick Question: should option proceeds be deducted from purchase price to calculate the goodwill?
Many thanks.
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added 5 years ago
How do you factor net operating losses (NOLs) in valuation?
Full Question: How do you factor net operating losses (NOLs) in valuation? I try to determine the NOL present value and add it to the enterprise value. This approach is very speculative, so I try to exclude NOLs from my valuation analysis unless I feel fairly confident the company/acquiror could us... Read More
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added 5 years ago
Corporate Valuation Methodologies: about the case study
Hi there, a couple of questions here on the case study: (1). In the DCF page, how can you figure out these different diluted shares O/S if what you are trying to calculate (the price per share) is the input for our treasury stock method calculation for diluted shares O/S? (2). In slide 42 (WAC... Read More
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added 5 years ago
Why arent lease payments considered future debt obligations?
Full Question:
What is the rationale for not placing lease payments in the category of "future debt obligations" on your analysis sheet?
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added 5 years ago
For the WACC, should I use YTM or coupon for cost of debt?
Full Question:
For the WACC, should I use YTM or Coupon rate for the before tax cost of debt? I guess coupon rate, because the YTM can change if the bond is putable,callable,exchangeable,convertible etc.
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added 5 years ago
Advanced Valuation Modeling: Share repurchase
Hi, I'm not understanding this small thing: When the company buys back shares, what happens to them - does the company just "destroy" them so that the s/out decreases, or does the new owner get the dividends now? If the latter, why would dividend payout decrease? Basically, what happens to sh... Read More
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added 5 years ago
CLOSING aDJUSTMENT
Hello, I had done a valuation for a buy-side transaction based on discounting free cash flows to firm. Now, five months later we are trying to close the transaction. However, many things have changed in the company including cash balance, debt level, and working capital. Also, during this period o... Read More
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added 5 years ago
What do I do for beta of a company if there is no beta?
Full Question:
If there is no beta for a company, then can I regress the company's excess return (to its sector market index) to the sector market return? Should I use 1 year or 5 year (1 whole business cycle) data? I know that Beta instability can be a problem.
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added 5 years ago
Please clarify if any value is gained by buying back stock-1
Full Question: It has been said that holding cash isn't necessarily bad for a company. My belief is that the company can repurchase shares, therefore increasing their debt/equity ratios. Higher debt = higher tax shield so the value of the company is greater. Now, theory says, that's not true becaus... Read More
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added 5 years ago
Please clarify if any value is gained by buying back stock.
Full Question: So I understand your example. But my understanding is that M&M proposition II says that in a world with taxes, increasing debt means increasing the value of the firm or Enterprise Value. In the examples you provided me, the enterprise value of the firm stayed constant. I'm saying... Read More
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added 5 years ago
Free Cash Flow to Firm vs. Free Cash Flow to Equity
Full Question: When calculating free cash flow to equity, we adjust the capex+working capital+depreciation numbers so that it represents only the equity portion. That makes sense because the equity shouldn't be responsible for all the cash outflows of the firm. However, when I think about the physi... Read More
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added 5 years ago
Do you include pension liability in firm value?
Full Question:
Do you include the effect of pension liability in firm value (enterprise value or equity value)?
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added 5 years ago
How is the WACC - cost of debt affected by a tax benefit?
Full Question:
I have a question regarding cost of debt calculation. If a company has a tax benefit rather than the usual tax expense, then how is the after tax cost of debt calculated?
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added 5 years ago
ROE vs Revenue as stock return predictor
Full Question: On the attached exhibit, chart one plots revenue vs. return, and chart two plots ROE vs. return. The questions are: What are the flaws in just using Revenue? My guess: Does not capture expenses or profit margins. What are the virtues of using ROE? My guess: Captures both ma... Read More
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added 5 years ago
Do you need to adjust EBITDA for non-cash items?
Full Question: When calculating a comp’s EBITDA for valuation-related purposes, do you adjust for all items of a non-cash nature – specifically stock-based compensation expense, LIFO inventory adjustments and pension/OPEB expenses? Or, do you have to pay respects to the fact that EBITDA is a mi... Read More
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added 5 years ago
Maintenance capex vs capital expenditures revisited
Full Question:
Should capital expenditures that are not purely maintenance capex be reflected in the cash flows as an outflow of cash as long earnings from that investment are reflected in the EBIT?
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added 5 years ago
Cost Accounting vs Equity Accounting
What is the difference between Cost method Accounting Investment and Equity method Accounting Investment?
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added 5 years ago
What is the difference, if any between book tax vs GAAP tax?
Full Question: A company XYZ has a different book tax versus cash tax. How does that impact their FCF? And if they tell you that their book tax is 25% vs cash tax is 15%, how do you adjust for it in the FCF statements and analysis? Also, what is the difference, if any, between book tax vs GAAP tax?... Read More
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added 5 years ago
Replacement cost and earning power
I'm looking an industrial company and is required to value the company using their replacement cost to see how much the earning is generated, using that as a benchmark to value another company's on that basis to see its justified multiples. however, i'm not sure how i can get to the replacement cos... Read More
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added 5 years ago
How to value a company if we do or don't invest?
Full Question: We are using DCF to value an existing equity investment. The company is planning a capital increase two years down the road. We may or may not participate in the capital increase. My question is how should value our existing equity investment under these two scenarios (whether we ... Read More
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added 5 years ago