Package 4: Valuation Modeling Topics

We dive deeper into the nuances of valuation by understanding the art (not science) of valuation. Build upon your core financial models by integrating and layering on hands-on valuation analysis. Construct standard full-blown DCF analysis, trading & deal comps analysis and summary football field. Dive real deep into the nuances of valuation by ripping apart footnotes and making subjective inputs while balancing objectivity.


Last 10 posts

capital lease in TEV
Hi I understand that you exclude capital lease from TEV as it's not exactly debt and the difference with operating lease is just the accounting definition. However if you exclude capital lease from TEV, does that mean that you have to include any interest and depreciation effect from lease from ... Read More
Go to post added 6 years ago
Questions on calculating items for multiples (9 questions)
Multiples 1. For P/E, you only use net income from continued operations and income to common shareholders (excluding minority interest), correct? 2. Do you need to take out the EBITDA from discontinued operation from EV/EBITDA? usually EBITDA isn’t broken out that way and I don’t know if t... Read More
Go to post added 6 years ago
Other income
Other income under revenue is different from other income below EBIT line right? ie the former does not have to be reclassified to below EBIT line?
Go to post added 6 years ago
Clarification on LIFO/FIFO adjustment & tax savings
1. Adjustment after tax (cell H54): formula = 2.4*0.6-4.9. you add 2.4*0.6 because you generate lower pretax income so you should be paying less tax hence you add back 2.4*0.6 as tax savings after adjusting back to LIFO (since you are converting all comps to LIFO standard for apple to apple comparis... Read More
Go to post added 6 years ago
Clarification on cost method and tax differences in the 10K
1. Adjustments – 1st one – page 2 of 10K: “Including a favorable fourth-quarter adjustment of $1 million related to taxes, the sale resulted in a pre-tax gain of $26 million and a loss of $7 million on an after- tax basis. The relatively high tax cost is largely due to the tax basis of the Com... Read More
Go to post added 6 years ago
Question on adjustment of pre opening expense on diluted normalized EPS
Cell F87 of diluted normalized EPS $0.94 is after adjusting for pre-opening expense of $15,999. Since this not a one-off item and it was added back on the pre tax adjustment in cell F78, then the normalized diluted EPS is not $0.94 right? It should be: $0.94 + 15.999*0.6/491.717 = $0.95 (using dilu... Read More
Go to post added 6 years ago
Questions on the slide (various aspects) - 6 questions
1. pro forma vs reported numbers: Why take pro forma instead of reported numbers? When you are projecting the consolidated company post M&A, which financials to use? 2. organic vs inorganic growth: When you are trying to project organic vs inorganic growth and % of growth in the combined company... Read More
Go to post added 6 years ago
Questions on the slides (8 questions)
1. Do you always have to include cost of preferred equity in WACC? In which case you MUST include cost of preferred equity? 2. Since preferred equity is closer to debt, does that mean cost of debt < cost of preferred equity < cost of equity? How do you calculate the returns and valuation multiple... Read More
Go to post added 6 years ago
Relationship between P/E and inverse of P/E (2 questions)
Hi! First, awesome videos! Follow up questions on multiples, esp for listed companies valuation when analysing a stock in a long short fund context: 1. Is inverse of P/E = earnings yield = cost of equity? I was looking through this link and it states that this statement is wrong ie inverse o... Read More
Go to post added 6 years ago
Adjustments for non-recurring items to calculate adjusted EV/FCFF or other cashflow ratios
i. Does this mean you have to adjust for cashflow statement and balance sheets? Can you give an example for such adjustments for items that affects both cashflow statements and balance sheets? e.g. deferred tax impairments etc
Go to post added 6 years ago