![Mergers & Inquisitions / Breaking Into Wall Street](/img/default-banner.jpg)
- 167
- 7 483 259
Mergers & Inquisitions / Breaking Into Wall Street
United States
Приєднався 15 тра 2012
Mergers & Inquisitions and Breaking Into Wall Street are dedicated to helping students, entry-level professionals, and career changers break into investment banking and private equity, advance on the job, and master valuation and financial modeling.
Our material is different because it's based on real companies and real deals - not boring textbook theory. Rather than just "watching" the lessons, you become an active participant by following our proprietary BASES learning methodology - so you master the material in short order.
Visit our sites to learn more:
- breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
- www.mergersandinquisitions.com/ "Discover How To Break Into Investment Banking or Private Equity, The Easy Way"
Our material is different because it's based on real companies and real deals - not boring textbook theory. Rather than just "watching" the lessons, you become an active participant by following our proprietary BASES learning methodology - so you master the material in short order.
Visit our sites to learn more:
- breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
- www.mergersandinquisitions.com/ "Discover How To Break Into Investment Banking or Private Equity, The Easy Way"
The SaaS “Rule of 40”: Valuation Indicator or Online Echo Chamber?
Learn more: breakingintowallstreet.com/venture-capital-modeling/?
This tutorial will explain the "Rule of 40" for SaaS companies, including its valuation and operational implications and its limitations.
Files & Resources:
breakingintowallstreet.com/kb/venture-capital/rule-of-40/
Table of Contents:
0:00 Introduction
1:14 The Rule of 40 in a Nutshell
3:58 Part 1: How to Calculate the Rule of 40
7:27 Part 2: Valuation Implications
9:09 Part 3: The Rule of 40 as an Operational Metric
10:25 Part 4: The Rule of X and Other Variations/Improvements
11:42 Recap and Summary
This tutorial will explain the "Rule of 40" for SaaS companies, including its valuation and operational implications and its limitations.
Files & Resources:
breakingintowallstreet.com/kb/venture-capital/rule-of-40/
Table of Contents:
0:00 Introduction
1:14 The Rule of 40 in a Nutshell
3:58 Part 1: How to Calculate the Rule of 40
7:27 Part 2: Valuation Implications
9:09 Part 3: The Rule of 40 as an Operational Metric
10:25 Part 4: The Rule of X and Other Variations/Improvements
11:42 Recap and Summary
Переглядів: 383
Відео
The Balance Sheet: Back to the Future of Corporate Finance
Переглядів 2,9 тис.14 днів тому
Learn more here: breakingintowallstreet.com/core-financial-modeling/? You'll learn all about the Balance Sheet in this tutorial, with a focus on how it is used and projected in financial models and how to use it when answering accounting interview questions. Files & Resources: breakingintowallstreet.com/kb/accounting/balance-sheet/ Table of Contents: 0:00 Introduction 0:37 The Short Version 5:5...
Project Finance vs. Corporate Finance: Deals, Modeling, and Math
Переглядів 5 тис.28 днів тому
Learn more here: breakingintowallstreet.com/project-finance-modeling/? This tutorial will explain the differences between Project Finance and Corporate Finance, focusing on technical analysis, deals, and financial models. Files & Resources: mergersandinquisitions.com/project-finance-vs-corporate-finance/ Table of Contents: 0:00 Introduction 1:22 Part 1: The 2-Minute Summary 3:47 Part 2: Assets ...
Return on Equity (ROE): The Most Industry-Specific “Generalist” Metric
Переглядів 1,9 тис.Місяць тому
Learn more here: breakingintowallstreet.com/core-financial-modeling/? This tutorial will explain Return on Equity (ROE), including why it's critical for banks, insurance firms, and regulated utility companies, but less important in other sectors. Files & Resources: breakingintowallstreet.com/kb/financial-statement-analysis/return-on-equity-roe/ Table of Contents: 0:00 Introduction 4:36 Part 1: ...
Convertible Notes for Startups: A Safer Alternative Than the SAFE?
Переглядів 1,3 тис.Місяць тому
Learn more: breakingintowallstreet.com/venture-capital-modeling/? This tutorial will explain Convertible Notes for startup financing, including the mechanics, dilution, and a full comparison to SAFE Notes. Files & Resources: breakingintowallstreet.com/kb/venture-capital/convertible-notes/ Table of Contents: 0:00 Introduction 5:19 Part 1: Convertible Notes in a Seed Round 6:01 Part 2: Conversion...
Funds from Operations (FFO): REIT Analysis 101
Переглядів 1,3 тис.Місяць тому
In this tutorial, you'll learn all about "Funds from Operations" (FFO) for real estate investment trusts (REITs), a key metric used for financial statement analysis and valuation. Files & Resources: breakingintowallstreet.com/kb/reit-modeling/funds-from-operations-ffo/ Table of Contents: 0:00 Introduction 4:20 Part 1: Why We Use FFO for REITs 6:42 Part 2: Using FFO to Value REITs in Real Life 8...
Venture Debt: A Bridge to Survival for Startups, or a Bridge to Nowhere for Lenders?
Переглядів 1,7 тис.2 місяці тому
Learn more: breakingintowallstreet.com/venture-capital-modeling/? This tutorial will give you a crash course on venture debt for VC-backed startups, including the key terms, the returns calculations, and the risks. Files & Resources: breakingintowallstreet.com/kb/venture-capital/venture-debt/ Table of Contents: 0:00 Introduction 1:20 Part 1: Venture Debt: The Short Version 3:35 Part 2: How Lend...
Return on Assets (ROA): Niche Metric or Key Value Driver?
Переглядів 1,5 тис.2 місяці тому
Learn more: breakingintowallstreet.com/core-financial-modeling/? In this tutorial, you'll learn about Return on Assets (ROA) for both normal companies and banks and understand what it implies about a firm's valuation. Files & Resources: breakingintowallstreet.com/kb/financial-statement-analysis/return-on-assets-roa/ Table of Contents: 0:00 Introduction 0:50 The Short Answer 3:05 Part 1: ROA Cal...
The Capitalization Table: The Lifeblood (and Deathbed?) of Startups
Переглядів 2,8 тис.3 місяці тому
Learn more: breakingintowallstreet.com/venture-capital-modeling/? In this tutorial, you'll learn all about capitalization tables ("cap tables") for startups and venture capital-backed companies, and you'll get simple examples of the most important calculations. Files & Resources: breakingintowallstreet.com/kb/venture-capital/capitalization-table/ Table of Contents: 0:00 Introduction 1:07 Part 1...
Return on Invested Capital (ROIC) in Real Life: Beyond the "Investopedia Version"
Переглядів 3,9 тис.3 місяці тому
Learn more: breakingintowallstreet.com/core-financial-modeling/? In this tutorial, you'll learn all about Return on Invested Capital (ROIC) and what it tells you about a company's valuation and your assumptions in financial models. Files & Resources: breakingintowallstreet.com/kb/financial-statement-analysis/roic-return-on-invested-capital/ Table of Contents: 0:00 Introduction 0:52 The Short An...
EBITDA: Corporate Finance Lessons from Tony Soprano
Переглядів 4 тис.4 місяці тому
In this tutorial, you'll learn what EBITDA means, how to calculate it, and why criticism of EBITDA is both deserved and also a bit misplaced. Files & Resources: breakingintowallstreet.com/kb/accounting/ebitda/ Table of Contents: 0:00 Introduction 4:56 Part 1: How to Calculate EBITDA in More Detail 7:06 Part 2: What Does EBITDA Mean? 8:41 Part 3: Is EBITDA Close to Cash Flow from Operations? 10:...
Paid-In-Kind (PIK) Interest: Full Tutorial for LBO Models
Переглядів 3,6 тис.4 місяці тому
Learn more: breakingintowallstreet.com/core-financial-modeling/? In this tutorial, you'll learn about PIK (Paid-in-Kind) Interest in leveraged buyouts and LBO models and how it affects the returns for both the lenders and the equity investors. Files & Resources: breakingintowallstreet.com/kb/leveraged-buyouts-and-lbo-models/pik-interest/ Table of Contents: 0:00 Introduction 4:15 Part 1: PIK vs....
Growth Equity Case Study: Real-Life Example and Tutorial
Переглядів 5 тис.5 місяців тому
Learn more: breakingintowallstreet.com/venture-capital-modeling/? In this tutorial, you'll learn about growth equity case studies, get a real-life example, and learn the key differences vs. private equity and venture capital case studies. Files & Resources: mergersandinquisitions.com/growth-equity-case-study/ Table of Contents: 0:00 Introduction 1:16 Part 1: What to Expect in a Growth Equity Ca...
The Cash Conversion Cycle (CCC): The King of the Cash Flow Statement?
Переглядів 3,9 тис.5 місяців тому
Learn more: breakingintowallstreet.com/core-financial-modeling/? In this tutorial, you'll learn about the Cash Conversion Cycle in financial statement analysis and understand when it's useful vs. not so useful, and what it means for valuations. Files & Resources: breakingintowallstreet.com/kb/financial-statement-analysis/cash-conversion-cycle/ Table of Contents: 0:00 Introduction 3:49 Part 1: C...
SAFE Notes Explained: "Unsafe" for Startups?
Переглядів 2,1 тис.5 місяців тому
In this tutorial, you'll learn about "SAFE Notes" for investing in startups, how they compare to traditional priced equity rounds, and whether they're actually "unsafe" for startups. Files & Resources: breakingintowallstreet.com/kb/venture-capital/safe-notes/ Table of Contents: 0:00 Introduction 1:54 Part 1: SAFE Notes in a Seed Round 3:26 Part 2: Conversions in the Series A (Caps and Discounts...
Days Sales Outstanding (DSO): What’s the Point in Modeling & Valuation?
Переглядів 2,1 тис.6 місяців тому
Days Sales Outstanding (DSO): What’s the Point in Modeling & Valuation?
Liquidity Ratios: Bankers Living in a Credit Analysts’ Paradise?
Переглядів 3 тис.6 місяців тому
Liquidity Ratios: Bankers Living in a Credit Analysts’ Paradise?
Annual Recurring Revenue (ARR): The One SaaS Metric to Rule Them All?
Переглядів 4,3 тис.7 місяців тому
Annual Recurring Revenue (ARR): The One SaaS Metric to Rule Them All?
Enterprise Value vs. Purchase Price: The “True” Price in an M&A Deal
Переглядів 6 тис.8 місяців тому
Enterprise Value vs. Purchase Price: The “True” Price in an M&A Deal
SaaS Accounting (Revised): Bookings, Billings, Revenue, Deferred Revenue, and More
Переглядів 4,6 тис.8 місяців тому
SaaS Accounting (Revised): Bookings, Billings, Revenue, Deferred Revenue, and More
The Working Capital Adjustment in M&A Deals and Leveraged Buyouts
Переглядів 7 тис.10 місяців тому
The Working Capital Adjustment in M&A Deals and Leveraged Buyouts
The Venture Capital Case Study: What to Expect and How to Survive
Переглядів 11 тис.11 місяців тому
The Venture Capital Case Study: What to Expect and How to Survive
Investment Banking PowerPoint Shortcuts: 30-Minute Crash Course
Переглядів 12 тис.Рік тому
Investment Banking PowerPoint Shortcuts: 30-Minute Crash Course
The Dividend Discount Model (DDM): The Black Sheep of Valuation?
Переглядів 7 тис.Рік тому
The Dividend Discount Model (DDM): The Black Sheep of Valuation?
Bank Regulatory Capital and the Tragic Tale of Silicon Valley Bank and Credit Suisse
Переглядів 6 тис.Рік тому
Bank Regulatory Capital and the Tragic Tale of Silicon Valley Bank and Credit Suisse
Macros in PowerPoint: How to Use VBA for a "Swap Multiple Shapes" Macro
Переглядів 10 тис.Рік тому
Macros in PowerPoint: How to Use VBA for a "Swap Multiple Shapes" Macro
Is the Risk-Free Rate Really “Risk-Free”? Why U.S. Treasuries Could Trade Like Meme Stocks
Переглядів 3,9 тис.Рік тому
Is the Risk-Free Rate Really “Risk-Free”? Why U.S. Treasuries Could Trade Like Meme Stocks
The Debt Schedule in 3-Statement Models, LBO Models, and Credit Models
Переглядів 29 тис.Рік тому
The Debt Schedule in 3-Statement Models, LBO Models, and Credit Models
Cash-Free Debt-Free Deals in M&A and LBOs (Version 2.0)
Переглядів 13 тис.Рік тому
Cash-Free Debt-Free Deals in M&A and LBOs (Version 2.0)
3-Statement Model: 90-Minute Case Study from a Blank Excel Sheet
Переглядів 139 тис.Рік тому
3-Statement Model: 90-Minute Case Study from a Blank Excel Sheet
Why don't we integrate the 2% ($24m) advisory & management fees? I assumed that I should at least subtract that figure our return calculation (from the Equity Value). Thank you very much!
Why is the CapEx (factory maintenance expense) based on last year's number of factories and not the number of factories we have this year? Thank you very much
Maintenance CapEx relates to existing factories that have been operating for at least a year. New factories constructed in the current year do not yet need maintenance.
@@financialmodeling That makes sense, thank you
Files & Resources: breakingintowallstreet.com/kb/venture-capital/rule-of-40/ Table of Contents: 0:00 Introduction 1:14 The Rule of 40 in a Nutshell 3:58 Part 1: How to Calculate the Rule of 40 7:27 Part 2: Valuation Implications 9:09 Part 3: The Rule of 40 as an Operational Metric 10:25 Part 4: The Rule of X and Other Variations/Improvements 11:42 Recap and Summary
sorry i´m confused. in your webpage you mention that a you can also create a Net DTA (DTL-DTA). Does that play when calculating Enterprise Value (subtracting or adding)? also, inside DTA you find NOL, in order not to double count, should I consider Net DTA without NOL, and treat NOL at the end considering it a non-operating asset? thanks
DTAs and DTLs do not factor into Enterprise Value directly. Only the NOL component of DTAs does. The Net DTA is created as a way to simplify the projections and linking of the statements.
@@financialmodeling ok so DTA and DTL are treated as non recurring?
Sir, Do banks have working capital? How does the concept of Working Capital apply to a bank? Is the Liquidity Coverage Ratio (LCR) the same as Current Ratio/Working Capital Ratio? It is difficult to calculate the working capital of a bank because a bank's balance sheet does not include typical current assets and liabilities.
Banks have Working Capital, but it's not something you look at or pay much attention to in analyses. The Liquidity Coverage Ratio is completely different and deals with the bank's liquid assets vs. the possible cash outflows in a "stressed" period, and it's calculated based on different assumptions and metrics. Working Capital does not factor in.
Can it used in a nonprofit semi government medical organization?
I'm not sure I understand your question. Non-profit accounting has some differences, but the principles here for SaaS and subscription models still apply.
Great teaching and video Brian
Thanks for watching!
Hey Brian thanks for the video. I checked for the file and didn’t see it on the site. Kindly can you provide and updated link?
This one is not available because it uses an old version of the model. We may eventually create a new one.
Bro, thank you for the good stuff. cheers!
Thanks for watching!
where can I find this Excel?
Click "More" or "Show More" and scroll to the links at the bottom.
Thanks for your video! When calculating the tax-deductible interest expense on the P&L, you included the entire interest expense (included the interest you didn't pay, like the PIK), not just the coupons you paid out to debt holders. Is this correct? Is the entire interest expense tax deductible?
Also, why not include mandatory principal repayments in the interest line in the P&L? Are they not treated the same?
For LBO model purposes, the entire interest expense, including both Cash and PIK Interest, is tax-deductible unless otherwise specified. There are some special cases where this is not true, and some regions limit the % of Interest that is tax-deductible, but in a 60-minute case study, you can't really think about these points. See the PIK Interest tutorial for more.
Debt principal repayments are never tax-deductible in any region or industry. They appear on the Cash Flow Statement and are not a tax deduction because they represent the simple repayment of borrowed capital, not the expenses of using that capital over time.
Thank you.
Thanks for watching!
Can someone please clear this doubt: when Accounts Receivable increases, why won't the cost of goods sold increase? Accounts Receivable increased due to "extra" sell of a product. So, shouldn't have the costs of goods sold also increased? I cant seem to understand why COGS wont increase!?
In real life, when AR goes up, it means the company has delivered a product/service to the customer, which almost always comes with associated COGS. So you would normally see at least a small increase in COGS. In this artificial example intended for interview questions, we do not walk through that scenario because this is intended to be used for a very simple interview question about AR. We do cover more real-world scenarios with added complexities in the courses and guides.
@@financialmodeling perfect Thanks!
Thank you! Most of the banking videos are usually super long or not detailed enough, so this 15 min vid strikes a great balance!
Thanks for watching!
Do investors usually prefer to see a negative or positive change in NWC?
A positive Change in WC is always better from a cash flow perspective. There's a video on the Change in Working Capital if you search this channel or look in the accounting playlist.
This was great, could you make more complex videos of solving and explaining interview type questions - thanks!
There are some older videos in this channel on common accounting interview questions if you do a search. We may do more in the future.
Awesome, please share a detailed video on the cash flow statement as well. Thanks
Thanks. We will cover the other statements soon.
If equity proceeds are 1484 why does that not tie to the total return to equity investors? It seems like there’s more money unaccounted for
Total Return to Equity Investors = Exit Equity Proceeds - Equity Contribution = 1484 - 500 = 984.
Excellent👍
Thanks for watching!
Great video, as always Sir, please create more and more videos
Can you please address the “creative” side of accounting and how Finance professionals can manage the results without having to micromanage every entry? By “creative” I mean how 10 accountants will have 10 different AJE’s for the same scenario and they will all be acceptable under GAAP.
It's an interesting topic but not really a core focus of this channel or something we know much about. As someone working on deals or advising large companies, you need to understand high-level accounting but not the details down to that level. So our coverage focuses more on the main concepts rather than journal entries (can't imagine a banker ever asking about them in a standard interview).
Files & Resources: breakingintowallstreet.com/kb/accounting/balance-sheet/ Table of Contents: 0:00 Introduction 0:37 The Short Version 5:56 Part 1: Balance Sheet Sample and Example Line Items 7:51 Part 2: Financial Model Projections and Required Links 11:37 Part 3: Why the Balance Sheet is Critical in Interview Questions 13:06 Recap and Summary
A common error made in the computation of return on capital is using actual taxes paid in the computation of the after-tax operating income. This will result in a double counting of the tax benefit from debt, once in the return on capital (which will be increased because of the interest tax savings) and again in the cost of capital (which will be reduced the reflect the same tax benefit)
Top standard!
Thanks for watching!
Would like to hear your input on P5: Would it not be prudent as an interview candidate to ask about the considerations of what "evenly over 3 years" means, as the proper interpretation of discount periods is essential and "evenly" could be considered with a continuous compound in theory. Furthermore, I think it would be necessary to ask the interviewer how much of a "stake" the PE firm retained after the IPO, as it is highly unlikely they maintained 100% stake for a full year post IPO, which calls back into question the sell off distribution. This leads into the last consideration that your solution seems to assume the IPO and sell of runs concurrently with the growth, where it is more practical that this IPO and sell off would take place after the EBITDA growth. The problem then would become more interesting on the needed assumptions of its post IPO growth and consequently equity stake value. Thus leading to differing valued cash flows discounted over the total 6 year transaction life. I love your content and thought Id see if what comes to my mind is too nitpicky or it makes sense I Have an IB analyst interview in 3 weeks Thanks for the great video
I think you may be over-thinking this and worrying about things that will never come up in an IB interview. These types of questions are much more common in PE interviews, to start with. Also, frankly, bankers have gotten dumber over time and are less likely to dig into these types of details (we find that many people at the Associate and VP levels now are fairly clueless). You could certainly ask for clarification on all these points, what "continuously" means, how much of a stake the PE firm retains, and in a real interview setting, you might do that. The goal here was to provide a quick/simple walkthrough of this question with certain assumptions in place.
You are so great! and many thanks for giving it for free :D
Thanks for watching!
In all hinesty this isnit a good practice, it only shows how you treat an investment which is a hot potato. By putting so much leverage and always refinancing, you are effectively putting all the risk to the debt holders or debt investors and you dont care what happens in thr business when business conditions change to the worse because your equity investment due to high returns are already recouped or you are derisked already and any additional income is just a bonus. If the business burns, the one who willabsorb those losses is the debt holders. This is corporate america, milk it to the core. I do not know whydebt holders eould even want to be inthat position of assuming all the risk while your equity partner is enjoying, i guess its because refinancing allows the transfer of risk from previous debtholder to a new debtholder while thepotato is still hot
I am not really sure what your argument, question, or comment is. Refinancing is common in all real estate and other asset-level finance deals. Lenders know the risks they are taking going into the deal based on the LTV, coverage ratios, etc.
Always Useful!!!!
Thanks for watching!
So generally the bigger NPV the better.
NPV is only relevant for the IRR, not the multiple, so... kind of? Not really sure what you're asking or implying.
I don’t understand why do you care about multiply. You can have +IRR but -NPV and +multiply. Still you will be losing money.
Not sure if I miss anything, but for the first part (2:32) the Lease Asset and Lease Liability under finance lease and IFRS operating lease seemed to be reduced at different rate each year Lease Asset reduced by depre while Lease Liab reduced by Principal repayment) But under GAAP both are decliend in the same rate as Depre=principal repayment. But under file at 19:38 in Balance sheet, Why under IFRS16, ROU asset=Operating Lease while it is unequal under GAAP (ROU asset=225 while Operating lease=210) where does 225 and 210 comes from? Thank you
Yes, the lease asset and liability may change at different rates under IFRS vs. U.S. GAAP. This is just how it works for a single lease. Over a huge portfolio of leases, these differences diminish. The 210 vs. 225 are arbitrary and don't correspond to any specific rule. Sometimes the Lease Assets and Liabilities do not equal each other exactly, and sometimes they do or are closer. But what really matters for all these calculations is the Lease Liability number, which is the same for both.
Something to add, it's easy to get an R^2 of 0.99 when you have only 3 data points. If you added in more companies, things could change.
That is true, but even if you expand the set of banks here (not done in the interest of time), R^2 is still quite high (over 0.9). It's higher correlation than pretty much any other operational metric / valuation multiple pairing in any industry.
Hi, What are your thoughts on capitalizing for instanse R&D which affects ebit and profit as a whole like professor Aswath suggests? That would also affect in computing ROE and ROIC. I would love to hear your thoughts on that since I'm trying to learn as much as possible. Thank you!
We tend not to do this because it over-complicates the analysis and doesn't change anything as long as you calculate R&D consistently for all companies in the set. Also, R&D in general is not a major expense for banks, insurance firms, and utility companies, which are the only 3 industries where ROE is important. If you do this, ROE will tend to increase because the R&D amortization in the numerator will be less than the normal annual expense (cash outflow), and the denominator will increase due to higher Equity to balance the R&D Asset on the other side - but usually it's a smaller increase, percentage-wise, than the numerator (but large variance by company/industry).
@@financialmodeling Alright. Thanks very much!
Files & Resources: mergersandinquisitions.com/project-finance-vs-corporate-finance/ Table of Contents: 0:00 Introduction 1:22 Part 1: The 2-Minute Summary 3:47 Part 2: Assets and Legal Structures 4:59 Part 3: Time Frame and Model Structure 6:17 Part 4: Debt Usage and Terminal Value 9:25 Part 5: How the “Deal Math” Works 12:21 Recap and Summary
Good stuff. If m starting a company, which which agreement should i use? i will using MRR model
How do I usually know which market I should use for the Equity risk premium? The S&P wouldn’t be useful for a company operating in Europe right ?
You can find the ERP data for other markets/regions by searching online (see Damodaran's data). Or just use the U.S. data and add a premium for the market you're in.
Is this just relevant for US GAAP ?
No. DTLs are created in deals worldwide because D&A on asset write-ups is not deductible in Stock Purchases (i.e., purchases for 100% of the company, including all assets and liabilities). There may be some exceptions in certain countries, but I don't think any large country does this differently.
How did you derive the 100 as the value of the other company
This is just an example for this video. It's not based on a real company. In real life, we would have to look in the company's filings to get this value.
Great video. I work with startups and the temptation of SAFEs is still high. I'd say that it is addictive as founders don't realize the consequences of dilution at the time of financing, for many SAFEs equal free money. I am also member of a group of investors and we have an investment policy which excludes investments in SAFEs.
Yes, this is very true. I think SAFEs are actually worse for investors because of their ambiguity in the capital structure.
@@financialmodeling You put your money against the possibility to convert it in equity if certain events take place in the future (with no limit of time). In the meantime, you have no rights whatsoever, unless you negotiate side letters and the the simple becomes complex. As an investor, no thanks.
Thanks so much for the video. This helped answer the question I was struggling with for hours!
Thanks for watching!
For which job roles is this course mostly focused on
Please see: mergersandinquisitions.com/breaking-into-wall-street-biws/
I like comparing it to the Effective Interest Rate on Debt %
Not really sure how that relates, but sure, I guess. I think there are probably more specific metrics that a bank or insurance company would use for analyzing assets/liabilities.
OMG thank you so much great!!!
Thanks for watching!
have you done the same for ROIC?
Yes, please see the previous videos in the channel.
Files & Resources: breakingintowallstreet.com/kb/financial-statement-analysis/return-on-equity-roe/ Table of Contents: 0:00 Introduction 4:36 Part 1: Why ROE for Banks and Insurance? 5:35 Part 2: ROE for Banks (JPM, Citi, Wells, and BofA) 7:42 Part 3: ROE for Utilities (MGE Energy) 11:40 Recap and Summary
Files & Resources: breakingintowallstreet.com/kb/valuation/comparable-company-analysis-cca/
How about : Net Income ÷ ( Total asset + Total Liabilities )
It doesn't really make sense conceptually because Total Assets + Total Liabilities does not represent any specific concept or sum to any specific number.
@@financialmodeling the concept is: the lowest contrarian price you can get by multiply it by EPS.
What discount rate to use for NOLs, and if one company were to buy another company’s NOLs
There is some debate/disagreement about that, but most people would say WACC if you're valuing an NOL on the basis of future tax savings from it. It would normally be the buyer's WACC in an M&A deal.
@@financialmodeling why WACC? I’ve heard people say cost of equity, in between cost of equity and cost of debt, and even the RF rate, but never WACC. Interested to hear your perspective
@@bromaro NOLs benefit all investors, not just equity or debt investors, because their future usage increases cash flows and makes it easier to pay for interest/principal on a cash basis and issue dividends. But they are only useful if the core business continues to perform well, i.e., generate positive Taxable Income that NOLs can offset.
@@financialmodeling but even if the core business doesn’t do well, wouldn’t you still be able to sell it off (business shuts down) which would only benefit equity investors
@@bromaro If a company sells the entire company, the value of the NOLs will only benefit the shareholders because the lenders just get back their owed principal. But the key question is who benefits from the NOLs while the company is operating as it normally does. You don't normally look at a shutdown scenario to decide on the proper discount rate. And note that NOLs may actually be written down completely in some deals, depending on the structure (especially in asset sales).
Can you please share the excel template?
Please follow the link in the pinned comment.
Can you explain how it was possible to simulate 50% equity and 50% debt with the EBITDA/debt multiple? it wasn't clear please, tomorrow I have an interview
I do not understand your question. EBITDA / Debt is not a valuation multiple; Debt / EBITDA is the metric, and it's a credit stat, not a valuation multiple. But I'm really not sure what you mean by "simulate 50% equity and 50% debt" because EBITDA never reflects the debt/equity split, as it is capital structure-neutral.
Hey Brian, this is great work. Thanks for sharing! I was wondering if you could help me figure out the stock value of the NOLs that Contexlogic has (2.7 billion). I am having trouble trying to determine the true value of the NOL, can you help out?
Sorry, but we don't offer 1-on-1 help for company analysis in these UA-cam comments. Happy to review Excel files, filings, or your own work and provide feedback if you have previously purchased a course or coaching service.