Equity Value formula Second Method - answer-LFCF/WACC =Equity Value
Not as common method
Levereged Free Cashflow
Only from equity Providers
For a sensitivity analysis what is the excel shortcut - answer-Alt A W T
For row input you put terminal value growth rate
For Column input cell...
DCF VALUATION MODELING
3 Key points on model drivers? - answer-1. The two most important model drivers
are sales volume and sales price.
2. You start by finding the minimum and maximum levels of the model drivers.
3. Only model drivers need to be tested
A DCF is an example of a _______ valuation
A. Relative
B. Cost
C. Absolute Valuation
D. Intrinsic Valuation
E. Market Valuation - answer-C & D: Absolute and Intrinsic Valuation
Advantages and Disadvantages of Comparable Trading Analysis - answer-
Advantages:
Readily available and observable data
Efficient Pricing
Disadvantages:
No peer companies are exactly the same as the target company.
Advantages and Disadvantages of Discounted Cashflow Analysis - answer-
Advantages:
One of the soundest valuation techniques
Provides an opportunity to learn about the business
Disadvantages:
Requires a-lot of inputs and the model is only as good as the inputs used
Advantages and Disadvantages of Precedent Transaction Analysis - answer-
Advantages:
Readily available and observable data
Shows market for sale or purchase of company
Disadvantages:
Hard to find perfectly comparable and recent transactions
Before you make data tables you must check excel for what? - answer-File-
>Options->Formulas
Under workbook calculations make sure its set to "Automatic" not "Manuel" or
"Except for data tables."
Debt to capital formula - answer-Debt/(Debt+Equity)
Define Comparable Trading Analysis - answer-Looks at the valuation for similar peer
companies that are publicly traded
, (Relative Valuation Technique)
(Shows Market view on valuation)
Define going concern - answer-The business is going to operate indefinitely into the
future.
Define Precedent Transaction Analysis - answer-Looks at the acquisition prices for
similar peer companies in recent transactions.
(Relative Valuation Technique)
(Shows Acquirers "Buyers" view on valuation)
Define Unlevered Free Cashflow - answer-Cash flow available to all capital providers
Define Weighted Average Cost of Capital - answer-The cost of capital from all capital
providers
Discounted Cashflow Analysis - answer-Builds a model of a company to get the
present value of all future free cash flows
(Absolute Valuation Technique)
(Shows Your View on valuation)
EBITDA Method Formula - answer-EBITDA
-Current Taxes
-Capital Expenditure
-Change in NWC
=Unleveraged Free Cashflow
*More Common in Capital Market Groups
Shorter to use
Shows EBITDA (A profitability Measure)
Enterprize Value formula - answer-ULFCF/WACC=Enterprise Value
*Both numerator and denominator represent all capital providers
Equity Value formula - answer-Equity Value = Enterprise Value - Net Debt
Equity Value formula First Method - answer-(ULFCF/WACC) - Net Debt = Equity
Value
Equity Value formula Second Method - answer-LFCF/WACC =Equity Value
Not as common method
Levereged Free Cashflow
Only from equity Providers
For a sensitivity analysis what is the excel shortcut - answer-Alt A W T
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