Help a monkey out with some modeling basics

Hello WSO,

This will be my first WSO post and I will start by screaming for some help :). I have read a lot about equity research and now I want to put it in practice myself. With some help from the Martin Shkreli lessons (Legend) I made this: https://drive.google(dot)com/open?id=0By7ANhp6HBO…
I know it is not a big master model (no debt schedule, own WACC calculations etc.) but still I would love to get some insight from someone with a lot more knowledge on the matter.

The main problems I have is:
-Is het allright to just take the average selling & administation expense / revenue and just claim that number will stay forever the same?
- is a debt schedule even necessary while it has so little impact on the outcome.
- is the ultimate share price caluculation right because im getting a bit stuck with the net debt and terminal value.

As I said it is not even close to a good model but I guess its better to just do it right from the beginning than learning I have done it all wrong at a internship (hopefully in the future ;)) I don't know if it's normal for people to just post such direct questions but I really haven't got anyone else to ask at this point

Thanks in advance for reading this :)

 

In order to forecast SG&A, you can take the current SG&A figure and divide it by revenues to arrive at it's % of sales and then extrapolate in the future years. However to obtain a robust projection, you will also want to adjust for seasonality or if you believe the company will spend more on or less on SG&A (i.e. increasing marketing efforts, or laying off employees) in the years ahead.

It is ideal to build out a debt schedule, as it certainly impacts the capital structure over time, the interest expense on the income statement, and cash flow from financing. Although for a simple model, I wouldn't worry about it. But don't just go through the model for the sake of modelling. Seek to understand your assumptions and how the statements are linked as well as how each line item impacts the final valuation and flows through the statements.

 

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