Modeling inorganic expansion
How would you go about modeling a business out that has a scheduled build out of locations over the next five-ten years? In my mind, this is inorganic expansion, so I am adding the incremental operating and financing lease debt from expansion to total debt and subtracting the incremental cash investment from total cash, which therefore makes my year five equity value a smaller % of EV. Is that the correct approach?
Also, the exact rent expense is not fully disclosed by the company because there is a split between operating and financing leases, and the income statement and notes don’t break down what exactly operating and financing lease expense is. Should I just use EBITDAR and a corresponding multiple on that rather than EBITDA?
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