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Prospective Monkey here. At my college, my professor always talks about a 15 year DCF, which I find ridiculously long. There is barely any visibility 2 years out let alone 15.

I was wondering how do people actually working at HFs frame their DCF assumptions and timeframe? And how valuable is it really when coming to a final conclusion about the stock? 

28 comments 03 Sep 2020 - maddy.ap

Hello everybody!

I'm writing a thesis about Facebook's valuation over time.
I want to build a DCF using the POV of a person who wanted to invest in the IPO (2012) just to see how a sensitivity table would have looked like.

Is there a way I can find analysts' past estimates (even for just revenues) at that point in time?

Thank you so much

1 comment 12 May 2020 - mipa98

Hi all - I work in a small boutique that mainly advises on buyside M&A in the middle market. Currently in the midst of PE recruiting, and obviously reviewing my models as a result.

I've come to realize that our models are....well kinda shit and all very high-level. For example, when we evaluate CIMs for our clients to give a prelim view of valuation and what to bid, we generally take CIM numbers, make some judgement calls on haircutting revenue and margins, and project everything under the income statement as % of revenue.

4 comments 23 Apr 2020 - Yasuo the Unad…

Hello,

Not sure if this is the correct area to post this (I haven't been on here in ages) but I would like some feedback on my DCF model.

The analysis tab has the financials from the SEC website. I analyzed the quarterly income numbers for two years and also the annual numbers for 5 years. This helped me see operating/net income margins, tax rate, and also the y/y percentages. I also calculated the FCF on this page as well. I did two types, simple FCFE (FCF from operations - Capex) and FCFE that included net borrowings.

1 comment 13 Apr 2020 - chasedgod

I've noticed it seems that sometimes it's used, and sometimes it's not. On a model test, should it be used?

Taking an example...assume:
-Initial Sponsor Equity **= $100 (no mgmt rollover)
-
Exit Equity Value = $200
-
Mgmt Option Pool = 10%, strike at initial sponsor equity
-
Shares Outstanding (arbitrary) **= 100

Implying:
-# of Mgmt Options = 100 x 10% = 10
-Initial Equity per share = $100 / 100 = $1.00
-Exit Equity per share = $200 / 100 = $2.00

13 comments 24 Feb 2020 - risk adjusted …

I'm making a lateral move within my company from operational finance/accounting to a FP&A role. As part of my application I have to do a case study. This is my first true "finance" role - take it easy. Case study is as follows:

Given Selling company's P&L (3 years actual, 4 years forecast) - closing date on end of year 3 - and a PPT of investment opportunities/risks; value this company and make an investment recommendation.

1 comment 27 Jan 2020 - ImTryingHere

Hey all. This is my first post. I am an incoming SA at a MM IB. I have been practicing my modeling for this summer and have run into an issue regarding operating leases. GAAP and FASB have effectively begun to list them as debt on the BS... I get that the correct conceptual trading comp would be EV( Including operating lease liabilities) to EBITDAR.. Here is the issue as of today.

1 comment 11 Jan 2020 - MittHunstman

Hello all, been prepping with the WSO course, and am working on the PaySmart case. I have two questions, one specific to this case, and one that's more general:

(1) Minor point, but in the video solution, when projecting out the market share for US and Europe, Europe increases by the given 0.5% (from 4.0% - 4.5%) in the first year, but the US market share gain of 0.25% appears to be delayed by a year. Is this an error?

1 comment 27 Dec 2019 - risk adjusted …

If you had to choose between the following two offers which one would you choose and why?

Alvarez & Marsal Valuation Services - Sr. Assoc. - 20-25% year end bonus based off hours billed.
EY TAS - Valuation & Business Modeling - Senior - 10% year end bonus, however EY is offering 10k more on the base salary

2 comments 29 Nov 2019 - Randomwalk45

I have a superday coming up this week with an EB and they have scheduled an hour-long modeling test. Its for an analyst position and I was wondering if anyone had any prior experience with this in interviews or any recommendations on prep.

Thanks in advance for the help!

1 comment 09 Sep 2019 - Jim Smith IV