Hi,
just scrolled through some of the BIWS materials and saw the following calculation for EV (they use "company value") : Cash Flow / (Discount Rate – Cash Flow Growth Rate).
Isn't that a rather vague way to express it? Seems like a mixture of FCF/(1+WACC)^x and EDIT: FCFn*(1+g)/(WACC - g).
WSO Admin note 1: WSO announces financial modeling and valuation courses
WSO Admin note 2: Breaking into Wall Street vs Wall Street Oasis
| +3,754 | Bank of America - Juniors Strike to start Monday May 6th | 410 | 20m | |
| +804 | BOFA ALREADY TRYING TO COVER UP THEIR TRACKS | 79 | 9h | |
| +530 | This is a dark day for Wall Street. | 43 | 2s | |
| +345 | BofA Associate Death - WSJ, FT, CNBC, Bloomberg | 36 | 13m | |
| +182 | Analyst at Bofa FIG-Thoughts | 28 | 8h | |
| +180 | How to strike without being fired. | 21 | 2h | |
| +169 | Big Layoff at Barclays - 5/1/24 | 88 | 18h | |
| +145 | Hey WSJ, BBG, CNBC, FT, it's been more than 72 hours that this BofA IBD Associate was reported dead | 17 | 1h | |
| +136 | BofA List | 34 | 28m | |
| +124 | Shame on you, BofA. But also, the industry needs to change. | 17 | 7h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
What? no, you have your formulas backwards
What do you mean?
Lol, your edit both answers your question and shows you understood my post. Stop playing dumb.
Dude, no need to be playing as its obvious that I don't know my shit. Thanks for confirming that my edit is correct. However, what about the formula from BIWS. Your reply to my initial question was "no, ..", i.e. the formula is correct. But is it really?
Yes it's correct. It's the same as what you have written. Is your concern that it's not multiplied * (1+g)?
But there should be two parts. A sum of FCFs discounted with WACC and a terminal value discounted with WACC - g (assuming PGM is used). Summarizing tis to Cash Flow / (Discount Rate - Cash Flow Growth Rate) douesn't seem accurate, does it?
This enterprise value formula is for a single period capitalization where you assume a steady cashflow into perpetuity. As others have said typically you would PV the cash flow each year then the terminal value would represent the portion of the EV related to the business in perpetuity.
Sed non veritatis nemo suscipit hic rerum et id. Tempora architecto pariatur quibusdam. Voluptatem consequatur nam non odit maiores aperiam.
Quia nostrum error id nihil. Qui et at ullam sit deserunt aut.
Eos quo in ratione fugiat. Molestias et dolore quis id dolor. Ratione distinctio odit aut aut assumenda.
Eum dolor eum earum. Dolorem aut tenetur explicabo consequatur sed. Praesentium minus dignissimos temporibus distinctio.
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...