vania-janet/multiturn-rag-retrieval-data huggingface dataset:
Using the following values: The formula for the future value of an annuity due is d*(((1 + i)^t - 1)/i)*(1 + i) See Calculating The Present And Future Value Of Annuities In an annuity due, a deposit is made at the beginning of a period and the interest is received at the end of the period.  This is in contrast to an ordinary  annuity, where a payment is made at the end of a period. The formula is derived, by induction , from the summation of the future values of every deposit.  The initial value, with interest accumulated for all periods, can simply be added. So the overall formula is
"This formula is not calculating ""Earnings"".  Instead, it is calculating ""Free Cash Flow from Operations"". As the original poster notes, the ""Earnings"" calculation subtracted out depreciation and amortization.  The ""Free Cash Flow from Operations"" adds these values back, but for two different reasons:"
"By the sounds of things, you're not asking for a single formula but how to do the analysis... And for the record you're focusing on the wrong thing. You should be focusing on how much it costs to own your car during that time period, not your total equity. Formulas: I'm not sure how well you understand the nuts and bolts of the finance behind your question, (you may just be a pro and really want a consolidated equation to do this in one go.) So at the risk of over-specifying, I'll err on the side of starting at the very beginning. Any financial loan analysis is built on 5 items: (1) # of periods, (2) Present Value, (3) Future Value, (4) Payments, and (5) interest rate. These are usually referred to in spreadsheet software as NPER, PV, FV, PMT, and Rate. Each one has its own Excel/google docs function where you can calculate one as a function of the other 4. I'll use those going forward and spare you the 'real math' equations. Layout: If I were trying to solve your problem I would start by setting up the spreadsheet up with column A as ""Period"". I would put this label in cell A2 and then starting from cell A3 as ""0"" and going to ""N"". 5 year loans will give you the highest purchase value w lowest payments, so n=60 months... but you also said 48 months so do whatever you want. Then I would set up two tables side-by-side with 7 columns each. (Yes, seven.) Starting in C2, label the cells/columns as: ""Rate"", ""Car Value"", ""Loan Balance"", ""Payment"", ""Paid to Interest"", ""Principal"", and ""Accumulated Equity"". Then select and copy cells C2:I2 as the next set of column headers beginning in K2. (I usually skip a column to leave space because I'm OCD like that :) ) Numbers: Now you need to set up your initial set of numbers for each table.
A company's stock price will reflect the general sentiment about a company's value now and in the future. Net income is only one figure. You need to crack open the net summary and see what's inside it. In the financials you reference in your question (http://www.marketwatch.com/investing/stock/FTNT/financials), you'll also notice that  Ultimately, the stock price is just a reflection on what the market feels its (current) future is worth (you, me, other investors with future value calculators and strong opinions on what would provide value for them).
"Yes, there are situations where a stock is a bad buy in spite of a low PE. PE ratio tells you the current share price divided by the prior 4 quarters earnings per share. It does not consider: Imagine someone walked up to you and said, ""Do you want to buy a piece of my business? I'll sell you 1% of it for $1000. Last year the business earned $25000."" A quick calculation shows a PE of 4 [$1000/($25000 *.01)]. Even though this PE is comparatively low, you wouldn't buy in without a lot more info. What kinds of things might you ask? PE is one tiny component of an informed investment decision."
I don't know about the Saudi part of your point, but generally these are estimations based on the ownership stake of X person's main enterprise (e.g. Amazon, Microsoft, Berkshire). Even if Bezos made millions one year investing in, whatever, McDonald's franchises, it's a rounding error compared to his ~$80bn stake in Amazon, so they don't need pour over tax returns to get exact info.
You don't mention any specific numbers, so I'll answer in generalities. Say I buy a call option today, and I short the underlying stock with the delta. The value will be the value of the option you bought less the value of the stock you are short. (your premium is not included in the value since it's a sunk cost, but is reflected in your profit/loss) So, say I go out and adjust my portfolio, so I am still delta short in the underlying. It's still the value of your options, less the value of the underlying you are short. What is my PnL over this period? The end value of your portfolio less what you paid for that value, namely the money you received shorting the underlyings less the premium you paid for the option.
"The formulae #issued shares = #outstanding shares + #treasury shares looks right. However it looks like the Treasury Shares are treated as -ve in accounting books and thus the outstanding shares are more than issued shares to the extent of Treasury shares. Further info at ""Accounting for treasury stock"" on wiki"
Been in tech research for quite some time through both '01 and '08, so I've seen different valuation metrics used at different times of the cycle.  I agree 4Q forward is the norm but I do 6Q forward model and depending on verticals, P/E, P/S or EV/EBIDTA.  And maybe DCF for sanity check.     Usually SSS/MAU/subs are used w/ ARPU or turns/B:B to derive top line. Earnings is an easy number to pull from bbg but the descriptive quality of earnings is not as good as EBITDA or FCF especially some companies choose to talk about adjusted numbers only.     Different strokes for different folks.  I must admit that based on my valuation model both AMZN/NFLX are both hard pass due to their valuation. But I was in AMZN in PA from my quant model.  Different strokes for different folks.
This is great! I'm not a CPA, but work in finance. As such, my course/professional work is focused more on the economic and profitability aspects of transfer pricing. As you might imagine, it tended to analyze corporate strategy decisions under various cost allocation models, which you thoroughly discuss.  I would agree with the statement that it is based on the matching principle but would like to add that transfer pricing is interesting as it falls under several fields: accounting, finance, and economics. Fundamentally it is based on the matching principal, but it's real world applications are based on all three (it's often used to determine divisional and even individual sales peoples profitability; as is the case with bank related funds transfer pricing on stuff like time deposits). In this case, the correct accounting principal allows you to, when done properly, better understand the economics, strategy, and operations of an organization.   In effect, when done correctly, it provides transparency for strategic decision making to executives. As I said, since my coursework tended to focus more on that aspect, I definitely have a natural tendency towards it.  This is an amazing explanation (esp. about interest on M&amp;A bridge loans, I get that) of the more detailed stuff! Truthfully, I'm not as familiar with it and was just trying to show more of the conceptual than nitty-gritty.   Thanks for the reply!
CAPM is a pricing model.  Not a risk model.  &gt; If you're talking about corporate finance where a firm is considering an investment such as a new project, then a determining a WACC and using it as a discount rate for your cash flow is a basic strategy.  Once again... WACC is a pricing model and has nothing to do with risk modeling.
Hey all,  I have no idea what to do in order to calculate the wacc. It just doesn't make sense to me! And more so, understanding the circumstances in which it would be appropriate to use the company's wacc as the discount rate in the project.   The Australian company tax rate: 27.5%  Applicable date for risk free rates: 28/8/17  10 year rate for risk free: 2.615%  8 year risk free rate- 2.505%  Credit spread for corporate bond: 95bp  I just don;t understand what I am supposed to do!
"Complex matter that doesn't boil down to a formula.   The quant aspect could be assessed by calculating WACCs under various funding scenarii and trying to minimize, but it is just one dimension of it.  The quali aspects can vary widely depending on the company, ownership structure, tax environment and business needs and it really can't be covered even superficially in a reddit comment...  Few examples from the top of my mind to give you a sense of it:  - shareholders might be able to issue equity but want to avoid dilution, so debt is preferred in the end despite cost. Or convertible debt under the right scenario.  - company has recurring funding needs and thinks that establishing a status on debt market is worth paying a premium to ensure they can ""tap"" it whenever hey need to.  - adding debt is a way to leverage and enhance ROI/IRR for certain types of stakeholders (think LBOs)  - etc etc etc  Takes time and a lot of experience/work to be able to figure out what's best and there isn't always a clear answer.  Source: pro buy side credit investor with experience and sizeable AuMs."
"I kind of understand the ""basics"", and have done a couple (with the assistance of pre-made excel sheets haha), I just don't feel that I'm creating an actual valuable valuation when I do one. While on the topic though, do you know where an individual investor can calculate the cost of debt for the WACC? I've been looking on morningstar and search up that public company and take the average of the coupon on all outstanding bonds. I don't feel like that's very correct though :("
You could look up their old SEC filings before they were placed in conservatorship. Derive WACC from that. Comp to peer financials from the same timeframe; see how they compare. Assume some sort of size premium if you so desire.  That might give you a picture of the business's cost of capital were it an independent entity. Since it's a GSE, you could make the case that its cost of capital is the rate on US treasury securities.   In reality, it's current cost of capital is probably a mix of the two.
If you're taking a Terminal DCF, you shouldn't be using 1-year risk free rates, so the 2.77% is probably much more accurate. That being said, we're in a historically low-rate environment, so even the 2.77% is probably a bit low.   Here's another data point that puts the WACC at 8%:  [http://www.wikiwealth.com/wacc-analysis:mcd](http://www.wikiwealth.com/wacc-analysis:mcd)
At the most basic level of financing a business -- you are trying to acquire capital as cheaply as you can to invest in your projects.  The measure for how expensive your capital is to acquire is Weighted Average Cost of Capital.    The formula for WACC:  Equity Ratio * Cost of Equity + Debt Ratio * Cost of Debt * (1 - Tax Rate) This is also your discount rate when you're making a DCF model.  Debt tends to be cheaper than equity when you don't already have any, and is also advantaged by tax rates since you don't pay taxes on interest.  In the real world, banks and lenders will ratchet up rates the more debt you acquire, or shut you out once you've taken on too much and your debt service coverage is too low for them.  In a classroom though, most teachers are too lazy to make a curvilinear formula for borrowing and will just state a rate for borrowing so you can load up on debt so long as you don't fall below being able to service your debt (cash flow to make your debt payments).  This will ultimately juice the returns on equity.  Realistically, you would find lenders would let you have ~20% equity in the business and ~80% debt without raising your teacher's eyebrow.  If you haven't taken accounting yet; be careful about the difference between cash and revenue in your analyses.  Revenue is recognition for work done; not cash in hand.  You can have all the revenue in the world but if no one's paid you for it yet, you can't pay anyone.
You don't even need to look at WACC (which is fairly complicated as a concept) you can simply look up gearing. Both high and low gearing is bad, so even if you've got loads of cash you shouldn't just be using that to invest
Thanks for this, great in depth answer. I had previously calculated a WACC and have used it for my discount rate.   As part of your last point on revenue vs. cash, I've set a accounts receivable period of 30 days, and then applied a factor of 30/365 * revenue to understand what portion of my revenue is not cash in hand. Does that make sense?
"No, I understood your question perfectly. I'm just saying that sort of situation is generally rare. A quick Google search yields [this article] (http://www.investopedia.com/financial-edge/1112/small-business-financing-debt-or-equity.aspx) which responds to the question - Which funding method should I choose? with the answer ""Often you will not have a choice"". That is exactly what I'm saying. The status and stage of your business dictates what sort of financing is even available to you. Most often you don't even have a choice between one or the other. If you want a formula, the other people responding mentioned [WACC] (http://www.investopedia.com/terms/w/wacc.asp) which is the ""standard"" that finance professionals typically use. You generally will want a WACC that is similar to other successful companies of your similar size and industry. The actual mechanics of adjusting your WACC will involve either issuing (or repurchasing) equity or debt. Regardless, what you are asking is not generally practical nor does it come into practice in 99 out of 100 financing situations. WACC is important to understand and consider but people don't issue equity or debt just to balance their WACC. Think about this another way... how easy is it to raise debt? Probably fairly easy as usually you can go to commercial banks or go to an investment bank if you're raising enough debt. Companies borrow all of the time, they're constantly paying off loans or taking new ones with different interest rates. There are revolving lines of credit, secured loans, factoring (borrowing against receivables), EETCs, fixed interest debt, variable interest debt, mezzanine debt, etc etc. How easy is it to issue equity? Pretty amazingly difficult... sure you have your IPOs but that happens once in a company's lifetime.
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"I hate to be the guy that says this but if you are indeed competing in the CFAI Research Challenge it is probably important. Remember you cannot use CFA as a noun (CFA's) you can only use it as an adjective ie a CFA charterholder.  As far as you question, what was provided below is pretty much all you need. Security Analysis, anything from the NYU professor and Greenwald stuff (although Greenwald, like someone already mentioned, is balance sheet focused) will get you where you need to go.  I am not sure what you mean by ""exotic valuation"" methods. As far as I know, the three most accepted and used valuation models by practitioners are the DCF model, the multiple model and the residual income model.  DCF uses short term cash flows and a terminal value discounted to today at some discount rate. The multiple model puts some multiple on earnings, book value, cash flow to arrive at a fair value. The residual model is the opposite of the DCF. One starts with the assets book value, then accrues all income generated in excess of WACC from all future periods.  Find some CFAI Level 2 books on equity and bond valuation. They pretty much cover it all.  And for a closing note, to perform well in investing and valuing companies it is not about what valuation model you use. Focus on WHY an asset should be worth what you think it is worth, not HOW you get to some valuation of that asset. Just my two cents."
The Securities Investor Protection Corporation is roughly analogous to the FDIC for investments.  There are some important differences like a lack of 100% guarantee you get all of your funds back. The SIPC understands you invested knowing there was some risk, and therefore you take that same risk in getting your money from a failed brokerage.  However there is still a level of commitment and trust that lessen the risk of investing in the wrong place. Also, do not typo the acronym at your work computer.  In the US (and perhaps elsewhere) it is a racist term, and you are likely to get some bad search results. http://www.sipc.org/how/brochure.cfm
I will be graduating this summer and plan in sitting for the CFA in December. My rationale is simple.  An employer has no idea of the quality of education my university provided me.  A CFA is a national certification of competency, one that is universally understood in the financial industry.  So yes, do it!
"Hi, I'm not sure what you're looking for, but I'll assume you are just looking for some distinguishing characteristics of an infra deal.  Infra deals are typically:  - Project financed meaning that a Special Purpose Company (SPC) is established to build and operate the asset. Project finance means that the SPC is quarantined from any party and is backed by the cashflows of the project and not by the balance sheet of some parent entity  - The SPC's cashflows are backed by a lengthy concession agreement (e.g. a government body provides a concession to a private party to operate the infrastructure asset for *say* 30 years). The concession agreement can best be thought of as a form of guarantee provided by the government body. The exact terms of the agreement will vary but something like ""you can operate this toll road for 30 years and charge $x per vehicle, indexed at y% p.a."" should give you the idea of what a concession agreement is.   - Because the concession agreement acts a bit like a guarantee over the cashflows of the SPC it makes longer term and higher leveraged financing more plausible. Imagine a national tollroad asset where the AAA-credit rated government body guaranteed 20m cars a year for 30 years with a $5 toll charge. Your tollroad SPC now has $100m of cashflow every year for 30 years which is AAA-credit rated. This should enable you to get competitively priced long term capital and to gear the SPC at much higher rates than non-infra deals.  - At the end of the concession period the SPC hands the asset back to the government completely unencumbered (debt-free)  So in a nutshell, a government body grants a concession to a SPC that guarantees its cashflows over a long term. The SPC is then financed based purely on this guarantee. The SPC then Builds the asset, Operates it and then at the end of the concession period Transfers it back to the government (google Build-Operate-Transfer or BOT for more detail if curious).    There are plenty of other distinguishing characteristics and a truck-load of detail that I have completely skipped/ignored so others may want to jump-in/ridicule me.  Good luck with your interview.  edit: formatting"
GIC perhaps? These would be quite similar to Certificates of Deposit where one is agreeing to lock up their money for a term and be paid a percentage for doing so. There are various kinds as some may be linked to market returns in some cases and others are just simple interest.
Libertarian pixie dust is the magical substance that allows libertarian defundingbudgets to work.   It is a truly amazing substance that makes market failures disappear, private interests capable of self-regulation for the common good over short-term gains, and turns the tragedy of the commons into a comedy of the commons.  It's how Ron will decide which 20% of research the CDC will halt and how the communications and broadcast industries will play nice without the FCC once he eliminates them.
It's one of those things where it was meant, economically, for the first purpose (opportunity cost) but has been used by big corporations for the later since you have to have international divisions to really even make it work (to some degree it does on the state level; however, the tax breaks aren't really big enough for it to make sense since the Federal is the big one).   It's also a huge reason why big corps have such low effective domestic tax rates on big profits and why the government is debating about restructuring tax law to prevent most forms of FTP'ing (you'd pay taxes on Gross Income essentially. It gets MUCH more complicated than that but France effectively does this now).  Also, it's very much an accounting thing, and accountants tend not to have a big seat at the table. Hence, the reasoning behind stuff often get lost on upper mgmt (or they fire the accountant, etc.). That's a BIG part of why it often makes things worse even when when the principal makes sense economically...
There are a whole host of types of filings. Some of them are only relevant to companies that are publicly traded, and other types are general to just registered corps in general. ... and many more: http://reportstream.io/explore/has-form Overall, reading SEC filings is hard, and for some, the explanations of those filings is worth paying for. Source: I  am currently trying to build a product that solves this problem.
Because the normal and **perfectly effective** regulatory controls in place for the past 130 years, that allowed the states to monitor and intervene in any predatory lending, was dismantled by Bush in 2003, when he blocked all 50 state attorney generals from routinely investigating what they noticed was a sudden growth in questionable banking practices.  Not only that, when [ALL 50 state attorney generals protested](http://www.atg.wa.gov/BlogPost.aspx?id=28620), Bush used the OCC to threaten to sue any state AGs who persisted.    i.e., in 2003 Bush forcefully undid the longstanding Consumer Protection laws and castrated the state AGs, right as the state AGs were proceeding to stop the uptick in illicit bank practices, leading to the mortgage crisis a few years later. It wasn't until the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that Congress **restored** what Bush dismantled in 2003.  (for your historical reference:  OCC = office of comptroller of currency.  The OCC and the states have long had a fair and balanced dual system, set by the vast majority of past Supreme Court rulings and the National Bank Act.  Bush abolished that precedent and used the OCC to give banks the power for the first time to fight off the state regulators.)
They have been changing over Immelts tenor. Didn't know he was stepping down though.       Share buybacks can be for a variety of reasons. They feel stock price is undervalued, they want to support their current shareholders, debt is cheap so they can change their wacc, they prefer to return capital in a way that does not increase expected dividends in the future (something about dividends being sticky, and the a cut in dividends Make it look like company is doing bad), etc.