i cant figure this out, it is really killimg me… i have put in way too much time in this one area and i am getting nothing out of it… to me this is the hardest section. if it come up on the exam -6 for me…
I just went through it. Haven’t done any questions on it, and if they come up I’ll be screwed. This one goes in the “too much effort to understand properly relative to exam weighting” pile.
I read it a while back but it didn’t strike me as particularly difficult. Didn’t do any questions so now I’m wondering what I overlooked. What do you find difficult about it?
I’ve never been the world’s best FSA man. When you start mucking around with the inflation rates in the accounts I get confused. Easily. I have similar issues with the temporal vs a/c with appreciating/depreciating currency. You go up/down/down/up/down and I start dribbling.
What book are we talking about here? Econ or PM
the section is basically ludicrous and glosses over very involved calculations… i’m inclined to think the material is impossible to master as written, so i’d just go general concepts.
that section is brutal. just tedious as hell. however, just remember taxes, changes in WC, and depreciation. (you’re talking about the nominal vs. real section?)
Cash flow forecasting for emerging market companies is challenging because emerging markets tend to experience high inflation levels, which makes the distinction between real and nominal cash flows and discount rates very important. Three issues that require particular attention are: Income taxes are paid based on nominal earnings, not real earnings. The real cash outflow from NWC is not equal to the change in real NWC. Nominal capital expenditures are difficult to forecast using an assumed relationship between nominal sales and nominal capital expenditures because the relationship is not constant when inflation is
What’s more annoying about this topic is that I work in a third world country analyzing emerging market companies and we don’t do any of this shit computations. We still do it the normal way! Either my firm is crap or the material is crap. Ugh.
^^ thats probably because inflation is not such a beast in your part of the world.anyway if you can shove food and energy out of “core inflation” stats, you might as well create your own cock and bull stable inflation story
income taxes : nominal before taxes real cashflow does not equal change in real WC, convert nominal wC to real cash flow capex, dep, and ebitda real rates move on.