Selasa, 05 Februari 2013

[smf_addin] Digest Number 2496

3 New Messages

Digest #2496
1a
Re: DCF by "hbeetroot" hbeetroot
1b
Re: DCF by "Jim Blarry" jimblarry
2
Chart Issue by "cesarcrivelli" cesarcrivelli

Messages

Mon Feb 4, 2013 11:25 pm (PST) . Posted by:

"hbeetroot" hbeetroot

Hi Jim,
Changing the number of years of your explicit forecast period shouldn't change the present value of cash flows if your assumptions are consistent.

Typically DCF valuations will be broken into two parts:
-The `explicit' forecast period will be for x years and you will calculate free cash flow for each year.
-The second part is the `terminal value' calculation which will give you a present value of all cash flows for years x+1.

Both calculations use the same input assumptions. e.g. if you are valuing the whole firm (rather than just equity) the PV of free cash flow is based on growth rate, operating margin, tax rate, changes in working capital, net capex and your discount rate.
The difference between the `explicit' and the `terminal value' phase is that all these parameters are a fixed value in the terminal phase. In the explicit phase you can vary the inputs from year to year (if you want).

Therefore, if you use consistent assumptions over time about growth, margins, tax rate, reinvestment and discount rate the number of explicit forecast years should make no difference to the value of the firm.
The only thing it will do is shift more value into your `explicit' forecast period but reduce the `terminal value' by the corresponding amount if you increase the number of explicit forecast years.

The main argument for using more or less years for the explicit forecast is that you want enough time for the firm to reach a `steady state' (usually fixed margins, growing at or less than the growth rate of the economy, stable return on capital) since the terminal value calculation will be based on fixed parameters forever.

Hope that helps.

--- In smf_addin@yahoogroups.com, Jim Blarry wrote:
>
> This isn't a specific SMF question, but rather a question about performing DCF's.  You seem like the right guy to ask.  Wouldn't growing out free cash flow further and further just give me a greater intrinsic value?  I mean if I grew them out 20 years instead of 10 years, then my present value of future cash flows would just be greater, right?  And that would give me a greater intrinsic value.  Any help would be appreciated, thanks.
>
> Jim
>

Tue Feb 5, 2013 12:22 am (PST) . Posted by:

"Jim Blarry" jimblarry

Great. That's really helpful to me, and I really appreciate it. Thanks.

Jim

Tue Feb 5, 2013 4:20 am (PST) . Posted by:

"cesarcrivelli" cesarcrivelli


Randy,

Regarding the chart issue that you helped me, there is one that I am trying to retreive, but so far nothing...

The web page is

http://www.4-traders.com/MARFRIG-ALIMENTOS-SA-9059879/consensus/

The chart is the last one: "Evolution of the average goal on MARFRIG ALIMENTOS SA"

I tried the following code, where 'traders' is the correspondent code for the company, found by vlookup, in another sheet.

RCHCreateComment(CONCATENAR("http://www.4-traders.com";SUBSTITUIR(smfStrExtr(RCHGetWebData("http://www.4-traders.com/"&traders&"/consensus/";"Evolution of the average goal on MARFRIG ALIMENTOS SA";32767);"src=";"title");CARACT(34);""));99;333;262;1)

The main problem here is that I can not look inside de html code with a code that contains the name of the company, since next time, if I need the chart for another ticker, the formula will not work.

Any thoughts?

Thanks

Cesar

Tidak ada komentar:

Posting Komentar