DCF COPY Flashcards

1
Q

Asset side valuation

A

E = EV - Net Debt (using FCFO/FCFF and WACC)

Affected by the capital structure of the company

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2
Q

Equity side valuation

A

E (using FCFE and Ke)

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3
Q

FORMULA: Equity (Asset side)

A

E=∑(t=1)^n FCFO/(1+WACC)^t +TV/(1+WACC)^n - ND

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4
Q

FORMULA: Equity (Equity side)

A

E=∑(t=1)^n FCFE/(1+ke )^t +TV/(1+ke)^n

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5
Q

FORMULA: Net Debt

A

ND=Total Fin. Debt – Cash and equivalents – marketable securities

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6
Q

FORMULAS: g

A
g(1)= ROE*Retained profits(RR) 
g(2)= ROCE*Net Investment Rate
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7
Q

FORMULA: ROE

A

ROE=ROCE+(ROCE-i)*D/E

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8
Q

When ROE=ROCE?

A

if Net debt=0

If Debt >0 then ROE>ROCE (Leverage effect)

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9
Q

FORMULA: ROCE

A

ROCE=EBIT(1-tx)/Capital employed=Nopat/Sales*Sales/CE

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10
Q

FORMULA: TV

A

TV=FCFF(FCFO)*(1+g)/WACC - g (Asset side)

TV=FCFE*(1+g)/ke - g (Equity side)

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11
Q

FORMULA: WACC

A

WACC=E/(D+E)(Ke )+D/(D+E)(Kd)(1-t)

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12
Q

FORMULA: Kd

A

Kd= 𝑖 (1 − 𝑡)=(Interest Exp/Amount of debt)*(1-t)

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13
Q

FORMULA: CAPM (Ke)

A

Ke=rf+β(rm - rf)

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14
Q

FORMULA: Beta Unlevered

A

βu=β/[1+(1-t)(D/E)]

Unlever the beta of comparable companies

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15
Q

FORMULA: Beta Leverade

A

β=βu x[1+(1-t)(D/E)]

*Relever with financial structure of the company to valuate

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