7. How Do You Estimate A Company's Cash Tax Rate? In this session, we focus on defining cash tax rate: the percent of pre-tax operating profits a company would pay in cash to governments assuming it was 100% equity financed. We also explain where to obtain data to calculate this value determinant, and walk through a sample calculation.
Below are links to 11 online tutorials: nine tutorials on the steps in a Price-Implied Expectations (PIE) analysis, a tutorial on M&A analysis, and a tutorial on real-options analysis.
Price-Implied Expectations (PIE) Tutorials1. How Do We Calculate Present Value? In this session, we review the concept of present value--the value today of tomorrow's cash flows--and relate this value to the magnitude, timing, and riskiness of future cash flows.
2. How Do You Estimate A Company's Sales and Sales Growth Rate? In this session, we focus on places to find historical sales figures and projected sales growth rates.3. How Do You Estimate A Company's "Operating Profit Margin"? This session focuses on where to find the data for and calculate historical operating profit margins and how to project future margins.
4. How Do You Estimate Growth In A Company's Working Capital? This session focuses on working capital--the cash tied up by a company's short term operating assets, netted against short term operating liabilities. We explain where to find the data, how to calculate historical working capital trends and how to project future working capital needs.
5. How Do You Estimate Growth In A Company's Fixed Capital? This session focuses on incremental fixed capital--the cash a company invests annually in long term operating assets. We explain where to find the data, how to calculate historical fixed capital trends and how to project future fixed capital needs.
6. How Do You Calculate The Cost of Employee Stock Options? This session explains how to calculate the cost of Employee Stock Options (ESOs), including already-granted outstanding ESOs and to-be-granted future ESOs.
8. How Do You Calculate A Company's Cost of Capital? This session focuses on calculating a company's cost of capital--the opportunity cost of all capital invested in an enterprise.
9. How Do You Perform a Price-Implied Expectations (PIE) Analysis? In the prior sessions, we defined and explained how to calculate and project various value drivers and determinants. This session puts it all together and uses those value drivers and determinants to explain the mechanics of the PIE analysis.
10. How Do You Analyze an M&A Deal? In this session, we explain how to calculate the acquirer's Shareholder Value At Risk (SVAR) and the seller's Premium At Risk at two moments in time: right after the deal is announced and prior to the market's reaction, and after the market has reacted. We also explain how to estimate the changes in share prices for both the acquirer and the target.
Real Options Tutorial
11. How Do You Assess The Value of A Company's "Real Option"? In this session, we focus on how real options can capture the value of uncertain growth opportunities. We also detail the application of some straightforward real-options valuation techniques to increase the power of expectations investing.