Financial Modeling and Valuation - A Practical Guide to Investment Banking and Private Equity

Informationen zum Autor PAUL PIGNATARO is the founder and CEO of the New York School of Finance (NYSF). He has over thirteen years of experience in investment banking and private equity in business mergers, acquisitions, restructurings, asset divestitures, asset acquisitions, and debt and equity transactions covering the oil, gas, power and utility, internet and technology, real estate, defense, travel, banking, and service industries. At NYSF, Mr. Pignataro continues to participate on the training team, actively providing training at bulge bracket banks and M&A teams at corporations, and billion dollar funds. Prior to his entrepreneurial endeavors, Mr. Pignataro worked at TH Lee Putnam Ventures, a $1 billion private equity firm affiliated with buyout giant Thomas H. Lee Partners. Prior to TH Lee, Mr. Pignataro worked in the Investment Banking department of Morgan Stanley. Klappentext Praise for Financial Modeling and Valuation"In Financial Modeling and Valuation, Paul Pignataro provides individual investors with an easy-to-use, step-by-step method for analyzing companies and their securities using the same financial modeling techniques used by professionals. By using Walmart, an American icon that is familiar to all, as a case study, Paul makes financial modeling come alive. Paul trained our staff in Beijing and is exceptionally well qualified to write this book."-Jack Perkowski, Wall Street veteran; Author; and Founder and Managing Partner of JFP Holdings Ltd.; former CEO and Chairman, ASIMCO Technologies, one of the largest producers of automotive components in China"Paul Pignataro's book is a treasure. He combines in one place a presentation of the concepts used in accounting and finance with the practical Excel ways to put them in action. This manual presents everything a student or a professional would like to understand about financial statements and valuation methods used in mergers and acquisitions. It is written in simple language, and the clarity of the exposé makes it a perfect companion for those who are involved in financial matters."-Georges Ugeux, Chairman and CEO, Galileo Global Advisors; Adjunct Professor, Columbia Law School; former Group Executive Vice President, New York Stock Exchange"Financial Modeling and Valuation is a key handbook for investment banking professionals and business students looking to get into the field. As a founder of a leading investment banking, private equity and hedge fund recruiting business, and as the former head of the analyst program at Morgan Stanley, I know the importance of demonstrated proficiency in financial modeling and valuation both during the hiring process and on the job. Finally, there exists a book that actually goes through the model building and valuation process in complete detail with methodologies critical to both budding analysts and experienced professionals."-Eleni Henkel, Founder and Partner at Henkel Search Partners; former Managing Director and Global Head of Morgan Stanley's Analyst and Associate Programs"Financial Modeling and Valuation offers an extensive overview of key fundamentals of investment banking, private equity, and M&A analysis. It will be of interest to students and discerning investors alike."-Professor Charles H. McGill, NYU Stern School of Business; Advisor with several leading private equity firms"I thoroughly endorse this financial 'model' work of art! Financial modeling and valuation methods are an art form of comparable analysis with a wide range of variables that can be considered quite subjective in terms of which method should be utilized. To become and stay informed, these mentioned models or tools can identify the proper program of analysis for 'rationalizing' a potential investment."-Henry W. McCusker, Analyst, Journalist, and Publisher; Founder and Director of Research, Scimitar Equity"This book contains all the basic concepts required to successfully apply for, and get a head start on...

List of contents

Preface xvThe Walmart Case Study xviHow This Book Is Structured xviiPart ONE Financial Statements and Projections 1Chapter 1 The Income Statement 3Revenue 4Cost of Goods Sold 4Gross Profit 4Operating Expenses 5Other Income 6EBITDA 6Depreciation and Amortization 8EBIT 8Interest 9EBT 9Taxes 9Net Income 10Non-Recurring and Extraordinary Items 10Distributions 11Net Income (as Reported) 11Shares 11Earnings per Share (EPS) 12Walmart's Income Statement 12Revenue 15Getting to EBITDA 19Digging up Depreciation 19Cost of Goods Sold 21Gross Profit 22Selling, General, and Administrative Expenses 23Other Income 23EBITDA 24Beyond EBITDA 24Depreciation and Amortization 24EBIT 24Interest 25EBT 25Taxes 26Net Income 26Non-Recurring Events 26Net Income (after Non-Recurring Events) 28Distributions 28Net Income (as Reported) 29Shares and EPS 29Income Statement--Making Projections 31Revenue 32Cost of Goods Sold 36Operating Expenses 38Depreciation and Amortization 40Interest Income 40Taxes 40Non-Recurring Events 42Non-Controlling Interest 43Shares 44Basic Shares Outstanding 44Diluted Shares Outstanding and the Treasury Method 45Earnings per Share 47Chapter 2 The Cash Flow Statement 51Cash from Operating Activities 51Revenue 53Cost of Goods Sold 53Operating Expenses 53Depreciation 53Interest 53Taxes 54Cash from Investing Activities 55Cash from Financing Activities 55Financial Statement Flows Example 56Walmart's Cash Flow Statement 62Cash from Operating Activities 62Cash from Investing Activities 65Cash from Financing Activities 66Cash Flow Statement--Making Projections 68Cash from Operating Activities 68The Seven Methods of Projections 69Cash from Investing Activities 73Proceeds from Disposal of Property and Equipment 78Items Based on Cash Available 78Cash Flow from Financing Activities 81Dividends 81Purchase of Common Stock 82Purchase of Redeemable Non-Controlling Interest 85Payment of Capital Lease Obligations 85Other Financing Activities 85Effect of Exchange Rate on Cash 86Chapter 3 Depreciation Schedule 91Straight Line Depreciation 92Accelerated Depreciation 93Declining Balance 93Sum of the Year's Digits 94Modified Accelerated Cost Recovery System (MACRS) 94Deferred Taxes 97Deferred Tax Asset 97NOL Carryback Example 98Deferred Tax Liability 99Projecting Depreciation 101Straight Line Depreciation 101Anchoring Formula References 105Accelerated Depreciation 116Chapter 4 Working Capital 139Operating Working Capital 140Walmart's Operating Working Capital 142Receivables 145Inventory 147Prepaid Expenses 148Accounts Payable 149Accrued Liabilities 151Accrued Income Taxes 152Projecting Operating Working Capital 153Receivables 154Inventories 156Prepaid Expenses 157Accounts Payable 159Accrued Liabilities 159Accrued Income Taxes 160Operating Working Capital and the Cash Flow Statement 160Changes in Accounts Receivable 164Inventories 164Prepaid Expenses 165Changes in Accounts Payable 168Changes in Accrued Liabilities 168Changes in Accrued Income Taxes 169Chapter 5 The Balance Sheet 175Assets 175Current Assets 175Cash and Cash Equivalents 175Accounts Receivable 175Inventory 176Prepaid Expense 177Non-Current Assets 178Property, Plant, and Equipment (PP&E) 178Intangible Assets 178Liabilities 178Current Liabilities 178Accounts Payable 178Accrued Liabilities 179Short-Term Debts 179Non-Current Liabilities 179Long-Term Debts 179Deferred Taxes 179Walmart's Balance Sheet 180Current Assets 180Non-Current Assets 180Goodwill 182Other Assets and Deferred Charges 182Current Liabilities 182Non-Current Liabilities 183Deferred Taxes 183Redeemable Non-Controlling Interest 185Shareholders' Equity 187Balance Sheet Projections 191Cash Flow Statement Drives Balance Sheet vs. Balance SheetDrives Cash Flow Statement 191Assets 193Accounts Receivable 194Inventory 196Liabilities 200Accounts Payable 201Balancing an Unbalanced Balance Sheet 205NYSF Balance Sheet Balancing Method 211Chapter 6 The Debt Schedule, Circular References, and Finalizing the Model 215Debt Schedule Structure 216Modeling the Debt Schedule 216Short-Term Debt 217Mandatory Issuances/(Retirements) and Non-MandatoryIssuances/(Retirements) 217Long-Term Debt Due within One Year 220Obligations Under Capital Leases Due Within One Year 223Long-Term Debt 225Long-Term Obligations under Capital Leases 227Total Issuances/(Retirements) 231Total Interest Expense 231Cash Available to Pay Down Debt 231Circular References 242Circular Reference #Value! Errors 250Automatic Debt Paydowns 254Basic Switches 255Finalizing the Model 256Part TWO Valuation 277Chapter 7 What Is Value? 279Book Value 279Market Value 279Enterprise Value 280Multiples 284Three Core Methods of Valuation 286Comparable Company Analysis 286Precedent Transactions Analysis 287Purchase Multiples 287Discounted Cash Flow Analysis 288Chapter 8 Discounted Cash Flow Analysis 291Mid-Year vs. End-of-Year Convention 291Unlevered Free Cash Flow 292Weighted Average Cost of Capital (WACC) 301Cost of Debt 302Cost of Equity 302Market Risk Premium 305Beta 307Levering and Unlevering Beta 308Terminal Value 309Multiple Method 309Perpetuity Method 310Walmart DCF Analysis 311WACC 313Cost of Equity 313EBITDA Method 319Perpetuity Method 323Chapter 9 Comparable Company Analysis 327Last Twelve Months (LTM) 328Calendarization 330Costco as a Comparable Company 331Costco Adjusted 2012 Year End 331Costco Adjusted LTM Data 332Costco Annual Income Statement 334Revenue 334COGS and Operating Expenses 334Depreciation 336Interest 338Taxes 338Non-Controlling Interests 341Non-Recurring Events 341Earnings per Share (EPS) 341Costco Quarterly Income Statement 342Backing into Q4 345Costco Year-End and LTM Adjustments 349Costco Projections 355Revenue 357COGS 357Depreciation 358Other Income 359Taxes 360Non-Controlling Interests 360Shares and Earnings per Share 360Calculating Comparable Metrics 361Diluted Shares Outstanding and theTreasury Stock Method 366Costco Market Value and Enterprise Value 368Multiples 372Chapter 10 Precedent Transactions Analysis 373Identifying Precedent Transactions 373Walmart Precedent Transaction Analysis 374Chapter 11 Conclusion 38352-Week High/Low 383Comparable Company Analysis 384Precedent Transactions 385Discounted Cash Flow 386Appendix 1Model Quick Steps 391Appendix 2Financial Statement Flows 393Appendix 3Excel Hotkeys 395About the Author 397About the Companion Web Site 399Index 401

Product details

• Authors: Paul Pignataro, Pignataro Paul
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 13.08.2013
• EAN: 9781118558768
• ISBN: 978-1-118-55876-8
• No. of pages: 432
• Series: Wiley Finance; Wiley Finance Editions; The Wiley Finance Series; Wiley Finance; Wiley Finance Editions; The Wiley Finance Series
• Subjects: Social sciences, law, business > Business > Business administration; Anlagen und Wertpapiere, Business & Economics / Investments & Securities / General, BUSINESS & ECONOMICS / Finance / General, BUSINESS & ECONOMICS / Corporate Finance / General, Business / Economics / Finance