43: Valuation in Emerging Markets LOS b: Calculate nominal and real-term financial projections in order to prepare a discounted cash flow valuation of an emerging market company. Does anyone have a trick, suggestion, thought or shortcut for this killer? I can drill the 5 step process into my brain if I have to but, the LOS does say calculate. Would this be a fill-in the blank type question, where they give you all the real-term projections except one and then ask to calc the missing item? Or are we simply talking about a Q providing the nominal WACC or growth and asking for real? Is a request to calc the real WC or FC or NOPAT fair game?
I will be getting to this tonight. I look this post up once I get there.
slouiscar Wrote: ------------------------------------------------------- > 43: Valuation in Emerging Markets > LOS b: Calculate nominal and real-term financial > projections in order to prepare a discounted cash > flow valuation of an emerging market company. > > Does anyone have a trick, suggestion, thought or > shortcut for this killer? I can drill the 5 step > process into my brain if I have to but, the LOS > does say calculate. Would this be a fill-in the > blank type question, where they give you all the > real-term projections except one and then ask to > calc the missing item? Or are we simply talking > about a Q providing the nominal WACC or growth and > asking for real? > > Is a request to calc the real WC or FC or NOPAT > fair game? Schweser says you dont have to calculate the 5 page answer. It will be given in the exam and you will have to find WACC or G. But who believes to Schweser?
slouiscar, I just sent you an email.
Sorry - I don’t see any short-cut here. I think the best way to do this is memorize the five steps. My guess, which seems to be the same as your guess, is that the exam would probably offer-up some calculations and ask us to decifer when real versus nominal cash flows should be considered. This kind of smells like the CFROI calc question that is long and in depth in developing…hopefully the idea is to make sure we know the process and give us some pieces to plug into the proper format. In a worst case scenario, the questions could get as granular as what is the proper way to handle working capital projections, PPE etc in Emerging Markets. There’s also a good list of items that the reading specifically calls out what to look for 1) Growth is overstated in times of inflation… 2) Capital turnover is typically overstated… 3) Operating margins can be overstated… 4) Use caution in interpreting credit ratios… There is a lot more detail, but I think it is just going to be a slow go. In my opinion, this topci could be a pitfall for many if not covered properly. I’m going to review this more tonight and I’ll post more thoughts.
What’s your email address. I struggled through that one and feel your pain. I would have added a few more Expletive’s in the title though. Dinesh and I put a couple of things together that seemed to help. I can send your way.
GMofDen Wrote: ------------------------------------------------------- > What’s your email address. I struggled through > that one and feel your pain. I would have added a > few more Expletive’s in the title though. > Dinesh and I put a couple of things together that > seemed to help. I can send your way. Wow sure, I appreciate the offer. I set this account up just for use in here and unless I am sending something or I expect an incoming I don’t check it frequently so I can be difficult to reach via this email but here it is: slouiscar at gmail.com
No problem sent it over.
i’m inclined to say the worst individual reading by far. and i’m not sure it explains comprehensively enough for anyone to replicate what they’ve done… not sure what to do. have a look at schweser for one… i too noticed the word “calculate” which really threw me.
Didnt show up on last years test that i remember…doesnt mean it wont show up but just my .02
reminder of the steps if anyone’s not near their books: 1. Forecast real revenue, EBITDA, invested capital, and EBITA. 2. Forecast nominal revenue, EBITDA, invested capital, and NOPLAT. 3. Forecast real NOPLAT. 4. Forecast nominal and real free cash flows. 5. Estimate firm value using a free cash flow model in both real and nominal terms by discounting real cash flows at the real WACC and nominal cash flows at the nominal WACC. btw, if anyone’s interested in sending the document you guys referred to i’d be much obliged: ngray30@hotmail.com
sent. and GMof, wow. I don’t know what to say. I just glanced at that quickly and I can’t imagine it not being a huge help. I’ll get back with a worthy thank you once I dig through it deep.
just forwarded to gazza, zombie, go4it, fasted, & cfasf
u got it mwvt