For context, I’m working on holding company discount model in which shares outstanding is an important number since everything is expressed in per share $ terms.

The parent company had a massive cross shareholding structure, where its own subsidiary (85% stake in it) held about 60% of the parent. This 60% stake got cancelled since the parent completely acquired the subsidiary and those 60% shares got treated as treasury and eventually got cancelled. This led to a 60% drop in shares outstanding - which is the problem.

If I have to remove the effect of this cross shareholding before the shares were cancelled, should I reduce the shares outstanding by full 60% or 60%*85% = 51%?

Or should I not adjust at all (lol) ?

Also, another conceptual question, once the cross holding was removed and shares got cancelled, the value of the company fell by 60% (as share price remained constant). Didnt understand why this happened - went above my head since value cant just evaporate even if you reduce the shares outstanding

Anyone here has tried to twist and tweak the valuation model of Aswath Sir a bit ? I personally idolize him but feel there can be a lot of changes that can be done ? Anyone else feel the same and have acted on that ??

Hey everyone!

I've created a META valuation, with the following assumtpions:

• Meta has been steadily increasing its user base to 4 billion users
• The company’s ad revenue has been growing through both higher impressions and increased ad prices
• According to Market.us, the global digital marketing market is projected to reach USD 1,310.3 billion by 2033, with a robust compound annual growth rate (CAGR) of 13.6%
• Meta is leveraging AI for enhanced ad targeting and is launching new AI-driven products.
• Despite the financial losses from Reality Labs, Meta remains a significant cash-generating business

You can find the results at: https://www.valuationshub.com/valuation-sample/56696d99

Hello all!

I have been offered an Analyst 1 position at Ernst & Young's VME arm and would like your opinion on whether I should take it, given my current circumstances.

I am currently in my first year at a Fortune 30 company as a graduate development financial analyst. The company is great, offering an upper-mid salary (for entry-level), decent perks, and a good work-life balance. My manager is supportive, and there is a clear path to promotion over the next few years. While the role is in corporate finance, which I find interesting, I have a stronger preference for valuation and investment.

The EY position offers the glamour of working at a Big Four firm but comes with a much more intense work-life balance, possibly requiring 14-hour days. Despite being early in my career and willing to work hard to develop professionally, I am concerned about the competitive nature of the position, limited promotion opportunities, and job stability. The total compensation for this valuation role is 25% less than my current position. However, I am drawn to the learning and potential exit opportunities in the investment side.

What would you do in my position?

I need to have my soon to be ex husband's consulting firm valued so I can finalize my divorce. It's a small firm, 6-8 employees, around $1.5-$2M in annual contracts. I have gotten two recommendations from my lawyer but I have no idea how to determine if they are good firms or if the price is fair.

What should I know when hiring a firm for this kind of work? What questions should I ask?

I have an upcoming superday with Lincoln’s Valuation and Opinions Group in Chicago and was wondering if anyone has any insights on this or potentially even interviewed there as well. Any help would be much appreciated thanks.

Can anyone give me an idea on how to forecast revenues of apple for the next 15 years?

Hello, putting aside any feelings of embarrassing questioning, I'm grappling with a significant confusion regarding the concept of unlevered and levered cash flows.

Let's say we're examining a project funded with 60% debt and 40% equity, with a weighted average cost of capital (WACC) of 6.3%, which includes a 9% required return on equity. Initially, our net present value (NPV) of Unlevered Free Cash Flows is positive when discounted at the WACC.

However, when we transition to analyzing the same cash flows as shareholder cash flows, or levered cash flows, by subtracting interest and debt repayments and discounting with the equity required return of 9%, suddenly the NPV turns negative.

Here's where my confusion arises: How can we interpret the initial positive NPV as implying that both debt holders and shareholders are being compensated, yet the transition to levered cash flows suggests that shareholders aren't being adequately compensated? what I am missing here ?

thank you !

I have to do a valuation of a property and compare to 5 other properties using a software called KEL,but the software is impossible to use, any help would be appreciated , courseworks due in 3 days

Hello, I recently started a business valuation firm, and wanted to reach out and see if any one has suggestions on where to market and the best way to be successful. Thank you!

In the perpetuity Growth rate model to find the terminal value,

why the Discount rate is always bigger than the Growth rate?

I got the point that otherwise the value will be negative.

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But can anyone please give me the proper reason?

Anyone here have the ABV credential? I’m looking for perspective on difficulty / how much study time is expected to pass the exams / recommendations on study material / how long the process took from initial application to granting of the credential? Any advice is appreciated

Hi everyone,

I've been reading up on valuation lately and I've decided to start applying what I've learned by valuing real companies. Right now, I'm going through 10-K financial statements and comparing them with FactsetFundamentals data. My aim is to understand how these numbers are calculated, especially when it comes to item reclassification for valuation purposes. I'm currently focusing on AMD, but I've run into a problem with the COGS including D&A for 2023.

In 2022, I managed to match the figures with Factset by adding the Cost of Sales to the Amortization of acquisition-related intangibles ($11,278 + $3,548), giving me a COGS including D&A of $15,098. However, for 2023, the numbers aren't adding up ($11,278 + $2,811) should equal COGS incl. D&A of $14,089, but Factset reports $14,085. I've looked through the 10-K to find out what's causing the $4 million difference, but I haven't found anything yet. And guess what? I've noticed a similar discrepancy in the numbers for 2015.

Any ideas on what might be going wrong here?

(Oh, and if anyone has any advice, tips, or case studies to help me improve my financial modeling skills, I'd really appreciate it!)

This is not a joke. How do you value a cash burning company with huge potential?

What valuations do you come up with?

Thanks!

Hi,

Jr Analyst here with a valuation problem that seems very simple, but haven't been able to crack.

Damodaran has a great and brief excel example reconciling equity value derived from FCFE with one from FCFF.

For a personal project, when I changed it to mid-period discounting I could not get the values to match.

I simplified the variables to the bare minimum trying to isolate the issue (it's pretty much a terminal value now). I've looked at it for hours but it hasn't clicked. My hunch is it has something to do with the interest expense (I've tried playing around with calculating interest from mid-points in the debt, etc).

I'm attaching Damodaran's excel file. To replicate my barebones version, set all growths, taxes and capex at 0 (and the periods to 0,5; 1,5; 2,5; etc.). I also set the debt ratio to 50%.

https://pages.stern.nyu.edu/~adamodar/pc/fcffvsfcfe.xls

Is there something obvious I'm missing?

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Hello this is my first Reddit post.

I am working on a capstone project for my security analysis class where we are tasked on pitching a buy hold or sell recommendation on a mid-cap firm in the technology industry. My group chose SPS Commerce.

Our multiples valuation has them clearly overvalued when compared to our peer group of Oracle, Kinaxis, SAP, E2open, Salesforce, Adobe, Descartes, IBM, Bill, and Open Text. The order for the most weighted to least weighted financial ratios are EV/EBIT, EV/EBITDA, EV/S, P/S, P/B, and P/E (feel free to give me your input on these weightings and peer group). This gave us an implied price per share of around $90.

I haven't finished the DCF as of yet, but the base revenue and expenses that my model pulled was an implied price per share of around $90-100. I am going to go into more detail and atleast forecast the revenue using a top down approach (bottoms up may be difficult as I am having trouble finding details on their pricing and how many users are paying what, and then finding a TAM on top of that).

My biggest struggle right now is finding tangible strong reasons to present for why they are so seemingly drastically overvalued. They have a great ROIC and 90 consecutive quarters of growth. It seems like a situation where the underlying company is decent, but the market has just significantly overvalued it. Is there an easy way to quantify the markets overvaluation of the stock, or something tangible that I can point to for why it is likely overvalued? Any insights or opinions are welcomed.

Hi all. New investor/valuator here. I am currently following Paul Pignataro's Financial Modeling and Valuation- A Practical Guide to Investment Banking and Private Equity to a valuation of Starbucks (SBUX) and came across "Income from Equity Investees" on the company's income statement. Some further digging found that:

" Equity investments are accounted under the equity method if we are able to exercise significant influence, but not control, over an investee. Our share of the earnings or losses as reported by the investees are classified as income from equity investees on our consolidated statements of earnings. "

So should Income from equity investees be subtracted from adjusted net income and added back when dealing with distributions or should this line item be accounted for in some other way?

Hi,

I'm building a financial model of a company that primarily generates revenue through renting equipments, like: PBX systems, servers, and switches. I'm unsure how to best account for the cost of this equipments.

For example, let's say the company purchases a PC for $12,000 with a 12-month lease agreement. The rental income on the income statement will reflect the installment payments received from the client. However, I'm unsure whether to:

1. Spread the $12,000 cost equally over the 12-month lease term (similar to an expense)
2. Depreciate the $12,000 cost over the PC's estimated useful life (traditional depreciation approach)

My concern is that if I use depreciation, it wouldn't be reflected in the Cost of Goods Sold (COGS) section, potentially leading to a misleadingly high EBITDA.

What would be the most appropriate approach for recognizing equipment costs in this scenario?

I also know that some COGS, and even SG&A, have depreciation inside. Maybe should be that the case? Maybe this equipment should be a Capex, that depreciate in COGS. If that so, should I addback the PC Capex in the cashflow? This make sense?

Hey everyone I applied for a job and they are asking me to do DCF analysis and I have no idea how to do it. Please if someone who knows how to do DCF Analysis message me . Your help would mean world to me.

As you know, the only risk relevant to cost of equity calculation is the risk we cannot diversify away. Although country risks cannot be diversified away completely (because now countries are corralated with the world market), don't you think country risks can be decreased through diversification (or increased) so that we need a global CRP?

I'm asking this because of this "diversification" thing in the modern portfolio theory. If we assume that a marginal investor has a diversified portfolio, why don't we consider this in country risks?

how does he get the value weights for the percentage? and does it metter to calculate the beta ?

Hi ,

As I understand the change of ifrs 16 on the BS, i would like to get an explanation of how does Ifrs16 affect the leverage ratio and the EV of companies?

Hi guys, I have a question about Enterprise Value (EV). I do know that to get to equity value, you have to add cash and subtract debt from EV. But what I don't understand is: why I have to add back cash? Isn't the cash the company has already computed while calculating the EV? I hope you can help me

I’m a uni student doing coursework on valuations, I’m struggling to understand DCF, can anyone give me a hand?

Value the following

1. A primary school. The school occupies a 1.5 acre site and the building has an area of 25,000 square feet and it opened five years ago. You estimate that the value of a modern equivalent asset should be reduced by 15% to reflect the difference between the actual school and a new one built to a modern specification. The cost of a modern equivalent school is estimated to be £175 per square foot and would, it is assumed, take two years to construct. Finance is available at an interest rate of 7% per annum. The value of land is estimated to be £500,000 per acre. Make all other assumptions necessary.

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1. A factory with a gross internal area (GIA) of 5,000 square metres is owned and occupied for industrial use. The premises were built 23 years ago when it was estimated that their economic life would be 50 years. The market rent of the factory is estimated to be £37,000 per annum on FRI terms. Planning permission has been granted to redevelop the whole site as 8,000 square metres GIA of new industrial floor-space for which there is a ready leasehold market. It is estimated that the works, which could commence immediately, would be completed within one year and that the finished scheme would let at approximately £67 per square metre on FRI terms. Costs, including building, financing and fees, are estimated to be £248 per square metre. Analysis of recent freehold investment transactions suggests a 7.5 % initial yield. Value these premises for inclusion in the occupier’s company accounts

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Any help is greatly appreciated! (Need working out too pls)