Anyone ever seen a depreciation schedule built like this with the useful life above the schedule but as a fixed number? I recently received a modeling test from a well-known hedge fund (rhymes with Citadel) and it came in this form. I just forecasted depreciation as a % of capex and rolled forward the schedule using those assumptions. Is there another way?
Hey Jack_the_Banker, I'm here because nobody responded to this thread after a few days...maybe one of these resources will help you:
More suggestions...
Hope that helps.
Ha - just did this same one.
Couple of key details this exhibit is missing : PP&E starting balance was 0; and the starting Depreciation was exactly 1/5 the Capex spend for that year.
If you assume that the salvage value is 0 for each asset, you can create a simplified waterfall in each cell that is (1/5 Capex from 5 periods ago) + (1/5 Capex from 4 periods ago) + (1/5 Capex from 3 periods ago)... and then just roll that forwards.
At least that's what I did.
I couldn’t remember exactly the structure but yes you are correct that beginning PPE was zero.
So did you assume D&A as a % of capex remained constant throughout the period? If you assumed a zero salvage value at the end of the forecast period did you converge D&A as a % of capex to 100%?
No, I think that’s overcomplicating it. If starting PP&E was zero, there’s nothing else to depreciate except for the new capex. They give you the D&A for years 0-4, so in year 5 (the first forecast year) you need to account for depreciation for the capex in years 1-5. If the lifetime is 5 years, then depreciation is the sum of (1/5 of capex years 1-5). You can build a “rolling” formula that sums the current year and the 4 cells to the left. When you fill that to the right, it should move the 5 references each time. So each year’s capex is being depreciated 5 times: once in the year it was spent, and then 4 years after. The last year will be treated the same, no convergence needed.
In non quia dolorum iste ipsam sed. Rerum voluptatem nesciunt at et. Nostrum id delectus aut asperiores. Saepe est voluptatibus sed omnis voluptas error ab dolorem. Aliquid quo harum sed et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...