DCF Question - How long does it take to learn?
Quick question--how long does it take to learn dcf on your own? This is under the assumption that the person doesn't know the accounting behind it.
How long will it take to learn the accounting behind it + dcf itself? How many hours should I study per day if I want to know how to do it by the beginning of Feb?
Sorry if it seems like a stupid question, I just want to know how much time to devote to learning it before I start.
Maybe an hour?
1) EBIT * (1 - tax rate) + D&A - CAPEX - Net increase in working capital = Current FCF
2) Pour through 10K/10Q to come up with fair assumptions of growth, and project FCF out 5 years; calculate terminal year growth rate w/ perpetuity growth model
3) Discount with WACC; WACC = cost of equity (from CAPM) * equity/(equity+debt) + cost of debt (interest on debt & market value of debt) * debt/(equity+debt) * (1 - tax rate).
Template: http://macabacus.com/valuation/dcf/overview SEC Filings: http://www.sec.gov/edgar/searchedgar/companysearch.html
[quote=BTbanker]Maybe an hour?
1) EBIT * (1 - tax rate) + D&A - CAPEX - Net increase in working capital = Current FCF
2) Pour through 10K/10Q to come up with fair assumptions of growth, and project FCF out 5 years; calculate terminal year growth rate w/ perpetuity growth model
3) Discount with WACC; WACC = cost of equity (from CAPM) * equity/(equity+debt) + cost of debt (interest on debt & market value of debt) * debt/(equity+debt) * (1 - tax rate).
Template: http://macabacus.com/valuation/dcf/overview SEC Filings: http://www.sec.gov/edgar/searchedgar/companysearch.html[/quote]
Judging from OP's post, I'm sure it's going to be more than that. OP, you might want to dedicate a week or two during your winter break to learn it.
One thing I must say is this though, if you haven't taken basic accounting class, you're going to try to remember the steps but won't really know what you're doing. Once you've taken the classes, you will have a clearer view and understanding for what you're doing. You can follow tutorials but if you don't know what you're doing, than it's just as bad as you wasting your time.
Take a look at Damodaran's Valuation couse (all materials are free on his site).
He goes in detail through every possible input of a DCF.
I guess if you're still in high school or something, then it will probably take a week to get the basics of how the 3 statements work, and then another week to successfully build simple DCFs.
I am currently a freshman, just learned how the 3 statements work in my basic intro to business class. So I guess it will prob take a week or so then. SB +1 though
thanks guys for the help!
TV should be calculated using a multiple not a perpetual growth formula
Modeling - How long did it take to completely understand LBO and DCF (Originally Posted: 03/25/2013)
How long did it take you guys to completely understand LBO, DCF modeling?
If you have good grasps of accounting/excel, a few days with the models and you'll be fine. They're really not that hard, but there are a lot of complex scenarios - of course, you can learn all this as they come up.
I found 3-statement modeling the hardest when I first started out since I didn't know what the fuck I was doing. Almost came when we linked them together no homo
Know that feel, man. I had absolutely 0 accounting knowledge when I started to really become interested in banking.
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