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by: Kwan

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# Financial Modeling and Valuation Week III Notes BU.230.620.W4.SP16

Marketplace > Johns Hopkins University > Finance > BU.230.620.W4.SP16 > Financial Modeling and Valuation Week III Notes
Kwan
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WACC & excels
COURSE
Financial Modeling and Valuation
PROF.
Dr. Ken Yook
TYPE
Class Notes
PAGES
5
WORDS
KARMA
25 ?

## Popular in Finance

This 5 page Class Notes was uploaded by Kwan on Thursday March 31, 2016. The Class Notes belongs to BU.230.620.W4.SP16 at Johns Hopkins University taught by Dr. Ken Yook in Spring 2016. Since its upload, it has received 28 views. For similar materials see Financial Modeling and Valuation in Finance at Johns Hopkins University.

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Date Created: 03/31/16
Modeling  III Thursday,  March  31,  2016 08:59 1.FSM_B: Input : =iferror:  C\$6-­‐  -­‐>  all  line  items  down Copy  C17,  Paste  CDE… SG&A  is  the  acronym  for selling,  general  and   Select  Depreciation  method:  previous,  average…(of  PPE) administrative.  SG&A  are  the  expenses  incurred   to  1)  promote,  sell,  and  deliver  a  company's   Dividends:  sticky,  untouchable,  stable (if  as  payout  ratio:  fluctuate,  in  reality:  enter  a  hard  value) products  and  services,  and  2)  manage  the  overall   company. Interest  rate:  check  short  time  treasury   -­‐use  current  market  rate SG&A  will  appear  as  operating  expenses  on  the   (now  0%,  or  3%) income  statement  for  the  period  in  which  the   F93:  3  choices  -­‐-­‐>  surplus  funds  (if  constant  ST  inv) expenses  occurred.  Hence,  SG&A  expenses  are   Ratio :  Days  Sales  Outstandig  (Avg  Collection  Period)  =  AR/Sales  per  day said  to period  costs as  opposed  to  product  costs.   This  means  that  SG&A  expenses  are C99 to  the  cost  of  goods  sold  or  to  the  goods  in   Days:  method-­‐   previous  (or  other  methods) inventory. Num  of  days:  more  practical  (cf.  AR,  %  of  revenues)  [3   -­‐ ifs] Examples  of  SG&A  include  sales  commissions,   Inventory:  Ratio advertising,  promotional  materials,   Days  Inventory=inventory/daily  COGS compensation  of  the  company's  officers  as  well   as  the  marketing,  sales,  finance  and  office  staffs,   Gross  PPE:  previous  +  Capex  this  year the  rent,  utilities,  supplies,  computers,  etc.  that   Capex:  capital  expenditure  (change  in  gross  fixed  asset) are  outside  of  the  manufacturing  function.   In  the  real  world:  Capex  plan   -­‐ download  data  in  the  near  future]  as  cape(SG&A  will  not  include  interest  expense  since   interest  expense  isreported  as  a  non Days  of  COGS:  row  137 expense.) Long  term  debt  if  kept  constant,  AFN  will  capture SF,  AFN  -­‐-­‐>  B/S  -­‐-­‐>  IS: Interest  income:  3  sources Interest  expense:  3  sources Modeling  III Thursday,  March  31,  2016 08:59 1.FSM_B: Input : =iferror:  C\$6-­‐  -­‐>  all  line  items  down Copy  C17,  Paste  CDE… SG&A  is  the  acronym  for selling,  general  and   Select  Depreciation  method:  previous,  average…(of  PPE) administrative.  SG&A  are  the  expenses  incurred   to  1)  promote,  sell,  and  deliver  a  company's   Dividends:  sticky,  untouchable,  stable (if  as  payout  ratio:  fluctuate,  in  reality:  enter  a  hard  value) products  and  services,  and  2)  manage  the  overall   company. Interest  rate:  check  short  time  treasury   -­‐use  current  market  rate SG&A  will  appear  as  operating  expenses  on  the   (now  0%,  or  3%) income  statement  for  the  period  in  which  the   F93:  3  choices  -­‐-­‐>  surplus  funds  (if  constant  ST  inv) expenses  occurred.  Hence,  SG&A  expenses  are   Ratio :  Days  Sales  Outstandig  (Avg  Collection  Period)  =  AR/Sales  per  day said  to period  costs as  opposed  to  product  costs.   This  means  that  SG&A  expenses  are C99 to  the  cost  of  goods  sold  or  to  the  goods  in   Days:  method-­‐   previous  (or  other  methods) inventory. Num  of  days:  more  practical  (cf.  AR,  %  of  revenues)  [3   -­‐ ifs] Examples  of  SG&A  include  sales  commissions,   Inventory:  Ratio advertising,  promotional  materials,   Days  Inventory=inventory/daily  COGS compensation  of  the  company's  officers  as  well   as  the  marketing,  sales,  finance  and  office  staffs,   Gross  PPE:  previous  +  Capex  this  year the  rent,  utilities,  supplies,  computers,  etc.  that   Capex:  capital  expenditure  (change  in  gross  fixed  asset) are  outside  of  the  manufacturing  function.   In  the  real  world:  Capex  plan   -­‐ download  data  in  the  near  future]  as  cape(SG&A  will  not  include  interest  expense  since   interest  expense  isreported  as  a  non Days  of  COGS:  row  137 expense.) Long  term  debt  if  kept  constant,  AFN  will  capture SF,  AFN  -­‐-­‐>  B/S  -­‐-­‐>  IS: Interest  income:  3  sources Interest  expense:  3  sources Long  term  debt  if  kept  constant,  AFN  will  capture SF,  AFN  -­‐-­‐>  B/S  -­‐-­‐>  IS: Interest  income:  3  sources Interest  expense:  3  sources Output :  different  definitions  of  ratios  sometimes Quick  ratio:  (current-­‐ inventory)/current   Total  asset  turn  over  ratio  =  sales/total  assets [check  solutions] Dynamic  Graph: Insert  combo  box:  under  Develop   -­‐ right  click:  format  control Control  +  click:  move  the  box =offset Select  -­‐-­‐insert  graph HW:  project  part  --­‐get  the  above  two  worksheets 2.WACC: CORE:   In  Corporate  finance  &  Asset  pricing  model In  PPT  8  -­‐ excel:  tax  shield Equity:  use  market  value  =  price*shares  outstanding (cf.  book  value  on  b/s   -­‐-­‐a  huge  difference) PPT  17  -­‐ excel: Ignore  the  selling  price  as  in  the  future,  it  becomes  0. Long  term  debt  if  kept  constant,  AFN  will  capture SF,  AFN  -­‐-­‐>  B/S  -­‐-­‐>  IS: Interest  income:  3  sources Interest  expense:  3  sources Output :  different  definitions  of  ratios  sometimes Quick  ratio:  (current-­‐ inventory)/current   Total  asset  turn  over  ratio  =  sales/total  assets [check  solutions] Dynamic  Graph: Insert  combo  box:  under  Develop   -­‐ right  click:  format  control Control  +  click:  move  the  box =offset Select  -­‐-­‐insert  graph HW:  project  part  --­‐get  the  above  two  worksheets 2.WACC: CORE:   In  Corporate  finance  &  Asset  pricing  model In  PPT  8  -­‐ excel:  tax  shield Equity:  use  market  value  =  price*shares  outstanding (cf.  book  value  on  b/s   -­‐-­‐a  huge  difference) PPT  17  -­‐ excel: Ignore  the  selling  price  as  in  the  future,  it  becomes  0. Equity:  use  market  value  =  price*shares  outstanding (cf.  book  value  on  b/s   -­‐-­‐a  huge  difference) PPT  17  -­‐ excel: Ignore  the  selling  price  as  in  the  future,  it  becomes  0. DCF,  DDM Industry    life  cycle: Intro  -­‐ growth  -­‐ maturity  -­‐ 1-­‐stage;  2-­‐stage;  3-­‐stage Bloomberg  DDM:  PPT  18-­‐   excel  (3-­‐stage  DDM) Goal: 1) Intrinsic  value,  over  or  underpriced 2) The  cost  of  equity:  use  goal  seek Copy  worksheet:  option  +  right  click  to  the  right Cash  dividends  +  Stock  dividends  (repurchase  of  common  stock  -­‐-­‐Capital  gains:   tax  wise)  =  Aggregate  dividends Exercise

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