@dcf; @valuation

Two DCF questions: 1) when using the terminal multiple method, your taking a multiple (EBIT/EBITDA, etc) multiplied by the metric itse Hope that makes sense- thanks in advance

17 Aug 2020

Why use EBITDA for multiples but FCF for DCFs when EBITDA is a proxy for FCF? Could you use EBITDA for a DCF as well then?

08 Aug 2020

Hi! Apologies in advance for the noob question. How do you treat/value convertibles (e.g. convertible preferred shares, convertible notes) in a DCF for a private company to derive price per share? The issue is that the fair value of the convertibles depends on the share price. Since it is a private...

15 Jul 2020

Hi Guys, I am valuing a company that drives its growth through acquisitions. Think something like Salesforce in my case. I have built out a financial model but a bit perplexed as to how do I factor in future acquisitions. The way I look at this, is that even in a pure stock-for-stock acquisition, it...

23 May 2020

I need a little guidance here. I am valuing a Japanese robotics manufacturer. I have no trouble forecasting operating free cash flow to firm, calculating terminal value, discounting, and getting the intrinsic enterprise value today. That part is done. Below is what puzzles me. That company is a cash...

16 May 2020

Hi! I was wondering whether you could help on the following question. When using DCFF method, you end up with the EV. Most DCF templates then substract the net debt to derive the Equity Value. However, when using other methods, such as EBITDA multiples, we tend to perform further adjustments...

14 Apr 2020

Hi, all - Working on a valuation in which we're using end-of-year discounting. FYE June 30, but client wants to know what portion of value is attributable to a period ending in October. Director insists on an annual forecast. How would you go about discounting the period that's getting split?...

20 Mar 2020

So to forecast balance sheet items you would calculate the DSO and AP cycle and then adjust/keep it the same in the future. The formula that I am familiar with is AR/Revenue * 365/360. But that is for annual forecasting, for the monthly forecast (or quarterly) do you just multiply by 30 (or 90)?

14 Jan 2020

Effective tax rate is plugged into DCF to calculate nopat, fcf and proceeds to npv. If the local tax rate is already within the concept of dcf, when the firm eventually adheres to that value range and sell, does that not mean that the firm has been double taxed? What is the concept of this tax rate...

09 Jan 2020

1) Would you use a ten year or a 20 year projection period for a DCF for a commodity company? *I was thinking since commodity companies can be cyclical industries, a longer forecast period could make sense... but I've never heard of a 20 year DCF before. and 2) Would you use debt from the balance...

16 Nov 2019

What come first in your mind after reading this question ? What influence has the ECB policy on the valuation process ? (focus on the banking and insurance company sector) What I need to research to find any impact ? I will be very grateful if you can help me

13 Nov 2019

Hey monkeys. Did a DCF/RV valuation of a middle-market mixed retailer for my M.Sc. dissertation, and played it by the book (think the usual cap. op. leases, bottom-up beta, comps and so on). Have to defend it for 45 min. in two days, and looking for interesting things to discuss (alternative...

19 Aug 2019

I skimmed an ER report from Bank of America today on Beyond Meat (BYND) and I saw that, whatever the assumptions regarding revenue, etc., in order to get a price target marginally above the (then) current market price, the analyst used a terminal growth of 5%, which would be a bit on the high side...

15 Aug 2019

Hello! Really hoping for advice here. I can't figure out for the life of me why I'm getting a negative implied perpetual FCF growth rate. I'm a new user so I can't link the spreadsheet or send screenshots but any guidance would be great!

30 Jun 2019

What technics/approaches/methods are used in IB houses to do due dilligence valuation? other than DCF and multiples? do you do all of these then average the results?

26 Jun 2019

I'm hurriedly on a valuation piece for a small tech / app entity (bolt on to human capital... pretty unique) using dcf and comparables and I'm pretty lost on what to do. I have a huge discrepancy in valuation: 10MM GBP (comparables/transactional) vs 50MM GBP per dcf which looks ridiculous but I'm...

29 Mar 2019

I've been trying to figure out why my balance sheet doesn't balance for the last 4 hours. All years are off by the same exact number. Can someone please help?! PM and I'll email the model - I can't figure out how to post the xsl. to the forum... Any help would be greatly appreciated!

18 May 2019

I've been trying to figure out why my balance sheet doesn't balance for the last 4 hours. All years are off by the same exact number. Can someone please help?! PM and I'll email the model - I can't figure out how to post the xsl. to the forum... Any help would be greatly appreciated!

18 May 2019

Hi everyone, I am computing the WC amount needed to adjust the EV. | Net Working Capital, per last balance sheet available: -665k | Average NWC, last 12 months: -797k ...this returns NWC surplus of 132k. Can anyone possibly explain why both are negative and how I can reflect this before adding the...

17 May 2019

Hey guys, I'm currently doing a valuation of a company trading in an emerging market country, and the market is really underdeveloped and illiquid. My question is, due to this being a systematic risk for the entire country, is it inherently included in the Market Risk Premium, meaning higher cost of...

04 Apr 2019

Hi guys, a short question. How would you adjust DCF if I want to arrive at a valuation as of end June 2019? Assuming that roughly half of this year's FCF will already be realized at that date, should I only consider half of the 2019 FCF in my valuation? Moreover, I should then discount it only by 6...

21 Mar 2019

I understand that for EV/EBITDA to make sense, EV should include the minority interest of company B because EBITDA includes it because of the consolidated statments. But what if we are not using EV in a multiple and we just want to know its value, would't it be wrong to add a minority interest that...

12 Mar 2019

Doing a 3 statement model with DCF attached. When revenue growth is 0, or even -40 or -70% as opposed to 5% or 20% etc - cash flows actually increase? when the business has high revenue growth the cash flows actually go negative! I presume this is due to how I have driven it, any fixes? this seems...

09 Jan 2019

Would really appreciate some help on this as I am struggling with a special project I got staffed on... How would one go around valuing a business that has a portion of its revenue stream from subscriptions to a product (bring in a monthly constant revenue per unit), and the rest from one time...

26 Dec 2018

Hello everyone, I am currently trying to assign value to loans that are somewhat "avant-garde." They are secured loans with the underlying collateral being a stock, or other assets that have capital gains. Eventually, the loans will be securitized by an investment bank, so I want to match how the...

24 Oct 2018

Hi guys, I am trying to value exchange companies like IG, CMC Merket for forex or Coinbase, Binance for crypto. In particular, I am interested on the revenue projection methodologies if anyone has knowledge on it ? Thanks in advance

16 Oct 2018

I am responsible for collecting data that is going to be used for the research held by The Kazakh-German University in Almaty. If you know anything about DCF, then your participation will be extremely useful! This research questionnaire has 10 questions. Data will be used only for research purposes....

13 Oct 2018

X to invest USD 2M for a 30% stake (new shares would be issued instead of acquiring existing shares) The funds raised would be used to acquire adjacent land to build a building extension After 2 years, a 21% stake would be sold to X (bringing our ownership to 51%) On top of the payment for the 21%...

11 Oct 2018

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02 Jul 2018

Hi I'm trying to learn to model by creating my own based off a template and understanding the ins and outs. I'm currently looking at a company that has 3 quarters released. Do I project the last quarter and sum up all quarters to get the whole year? What am I basing my projections on? Sorry for noob...

27 Jun 2018

Monkeys, I'm doing a practice DCF on my own and need to calculate the required return on equity. Checked out the journal and US 10 Years are hovering around 2.9%. What's a good market return rate to use (I'm valuing a specialty/discount retail chain) so I can calculate my MRP? Is a 10% expected...

17 Jun 2018

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11 Apr 2018

Hi, This has been happening many times so I thought I would mention here. We get the interns to pull out some basic metrics on comps to do a subsequent analysis on. I don't know how this has not been filtered but now and then I find outrageous outliers on one or two of the companies (out of say, 20)...

22 Mar 2018

Would appreciate any help on this! I am making a DCF for a Company and I am running into an issue with the value. The company has very high historical CapEx, for example 2017 EBITDA was $5.8bn and CapEx was $5.6bn, as a result of this the free-cash flow is very small. In my projection period, a...

12 Feb 2018

Hey Everyone! I'm an undergraduate Finance major. I've been practicing my valuation skills with real companies to understand better how it's really applied to the market. I'm proud to say that I improved a lot. However, there're still times in which I have trouble understanding financial reports....

02 Feb 2018

So I interned at a small regional boutique this summer and I am now recruiting from a target school for IB as a rising junior. I have a bullet point on my resume about helping the junior deal team help build a DCF and this analyst I was speaking with at a BB bank (over the phone) asked me if I could...

23 Aug 2017

So I'm trying to value a weird, very niche investment. Can't go into details, sorry, but I hope my question below is self-explanatory. Imagine a 20-year investment which gives a company guaranteed, risk-free returns but only if the company has taxable profits. These returns are in the form of cash...

11 Aug 2017

Hi, I am doing a DCF valuation of private company for a investor, who wants to fund a target requiring funds for future Capital investments. My query is whether I should value the company based on future cash flows of existing assets or should i include the cash flows from existing as well as new...

06 Aug 2017

For dcf valuation, it's my understanding that I will reach a fair value of the stock If I want to achieve a 1-year target price, do i need to discount the future cash flow to one year from now or do I just multiple the fair value by a growth rate? Thanks!

21 Jul 2017

Hello, I'm wondering if we should consider the multiple => NI to common without tax shield / Equity value, => instead of NI to Common including tax shield / Equity Value (which is more traditional = easily comparable to market data) My reasoning: When using an implied multiple, to get an...

22 Jun 2017

Hey all, I am writing today seeking help to clear some confusion I have about valuation. It appears that I know the formulas, but I am interpreting the numbers incorrectly, or in fact I cannot explain what is going on or why things are as they are. I would like to start by telling you how I find...

25 May 2017

Hey all, (values in millions) Did a valuation for a tech company and I came to an enterprise value of $1,231 (in millions) of unlevered cash flows. I added back cash in year 0, thus giving me asset value in year 0 of 1,311.I subtracted debt today which is 320 and got to an equity value of 991. As im...

25 May 2017

Hi Guys, So I'm caught in a bit of a dilemma. I am coming from a non-target school, graduating in a couple of weeks with Finance degree, 1st gen college student. Didn't do BB summer internship, but I went overseas and worked at a 2B+ hedgefund as an equity analyst for summer internship (they only...

12 May 2017

Hi, I am using DCF/freecashflow to value two projects/firms. Both firms have no reinvestment needs and all cashflows are equal except that the first one pays out as dividends all the cash it earns. The second firm retains all the earnings in the banks and earns interest income on it. The value of...

21 Feb 2017

A family friend has offered me an unpaid internship in vessel valuation. I will be relying a lot on using dcf modelling to value ships, fleets and companies. I will also be researching how other deals in the market affect valuations. Alongside this I will be working with quants and academics on...

06 Feb 2017

Accounts receivables increase by $100 (tax 40%) How will it impact on FCFF/FCFE? Will it decrease by 100? Or by 40? My thought: in case of increasing AR we recognize revenue in IS, So revenue is up by 100, Net income is up by 60 In CFS we substract AR, so CFO is down by 40 -> FCFF/FCFE down by 40?...

01 Feb 2017

This has been bothering me and I was wondering if someone could clarify. The two questions below might be related, or maybe I'm just mixing up the concepts in my head. Thanks in advance. 1. Let's say I'm modeling out financials for a company, and I think that growth should be 10% vs. 5% consensus...

18 Sep 2016

Hi All. So I know that in a DCF you use comps multiple average as the terminal multiple for your modelling target. I'm just wondering if we should use forward-looking multiples or current multiples? If we use forward-looking, should we use the one after 5 years to match with the time that DCF...

22 Aug 2016

I am trying to do a company comparable analysis for a pre-packaged software company with a market cap of 3 mln usd. It's operations are worldwide (Europe, Latin America, US). I am trying to find comparable companies for it. My questions are: 1. Is it ok to use SIC numbers as a main indicator to find...

13 Jun 2016

So I did a Facebook DCF, and getting a very high stock price of $174.52. Can someone maybe comment if this is correct? Seems a little high for me, so I am not sure what I am supposed to fix to make it lower and more reasonable. Edit (1): I fixed it again, and it is at 168 now. Not sure if this is...

31 May 2016