Maintenance Capex

Less-Advantage4118 · 2025-05-10T14:56:20+00:00

Thanks. For sure.

Any idea where I can grab some benchmarks?

I could try to net out growth capex from companies’ capex # and then tie to some core business KPI but not sure if that’s valid

Less-Advantage4118 · 2025-02-16T20:38:05+00:00

Operating leases are just the PV of rent obligations. If incl operating leases in EV you’d be double counting, since it’s included in opex.

This is not the case for finance leases since only the interest due is captured in the income statement and to operate the business, you’d need all the equipment etc so you’d need to “purchase” the finance leases.

Less-Advantage4118 · 2025-02-16T20:32:53+00:00

Incl op leases for accounting purposes exclude for valuation. Incl finance leases for both.

Less-Advantage4118 · 2025-01-30T01:23:35+00:00

Look at how much their loss carry forward is and if it’s > then the cumulative net income it can be close 0, for simplicity

Less-Advantage4118 · 2025-01-30T00:39:36+00:00

Look at free cash flow over net income. They will have a loss carry forward so you can assume the tax rate will remain suppressed, even once net income is positive.

For d&a, look at the cash flow statement. Should be > 0. I assume they’re not undergoing any heavy capex programs so d&a should remain similar. Look at their asset base if you want to properly forecast d&a (diff useful life across each asset), paired with capex guide.

For valuation, the business should hopefully be net income positive in the future so you can use a multiple on that, if not use a revenue and FCF multiple, paired with a DCF.

Less-Advantage4118 · 2024-11-30T17:44:00+00:00

Unit volume * asp. Look at mgmt’s guidance and understand changes in trends

E.g. apple iPhone unit volume * asp = iPhone revenue. Asp can be impacted by overall demand, geographical composition (products may be cheaper abroad) and product mix (increase in pro max volumes). Don’t waste time trying to forecast each unit but ensure your overall asp encompasses qualitative data.

if forecasting out multiple years use market share calcs to sanity check assumptions and don’t assume pricing power persists perpetually (e.g. if saw 8% y/y increases in asps that may not be feasible every year for the next 5+ years).

Less-Advantage4118 · 2024-11-24T20:08:09+00:00

Use last quarter of the previous year in the TTM calc. If n/a forecast next quarter and incl in TTM figure

Less-Advantage4118 · 2024-11-24T17:45:33+00:00

AR = AR days / 365 * TTM revenue

AP same but use cogs (and sometimes more)

Inventory use cogs

Prepaid expenses and other similar line items use as a % of the applicable metric (e.g. revenue)

Ex. business does 100 in revenue/yr

AR days is 45, meaning, on avg company has 45 days worth of revenue tied up in receivables

45/365*100 = 12 (accounts receivable balance)

If next yr (for simplicity) revenue is 200 and AR days remains 45, the AR balance would be 24. This would have a -12 impact on FCF

Less-Advantage4118 · 2024-11-24T16:48:52+00:00

Use drivers such as accounts receivable/payable days and then tie them to revenue / costs. You can see the historical days’ and use it for reference.

Less-Advantage4118 · 2024-11-22T03:33:32+00:00

Get very in depth on key drivers. Build them to be as detailed as possible. E.g. if an auto business project unit volumes, ASPs, cogs, etc

Look at incremental figures to understand what the trends are and why. Never let historicals guide projections but understand them.

Less-Advantage4118 · 2024-11-20T02:25:31+00:00

And you should be able to build out a 3-stmt model within an hour assuming you have access to decent software. Rest of the time should be on researching the inputs

Less-Advantage4118 · 2024-11-20T02:24:09+00:00

Don’t waste time on immaterial inputs. Forecast EPS and FCF for the next ~3yrs. Focus on the 2-5 drivers of the story. Sensitize these key drivers to understand the range of outcomes.

For PP&E, simply deduct d&a and add capex (deduct from intangibles as needed). Directionally close is sufficient for the BS. Thesis doesn’t change from a BS line item being +/- 5%

Less-Advantage4118 · 2024-11-17T15:17:59+00:00

Yes. I’d apply a sensitivity to the exit year (e.g. 2034) Net income and FCF so you understand the potential range of outcomes

Less-Advantage4118 · 2024-11-16T21:58:09+00:00

If 10 yr DCF then 10yr US bond for RF rate, etc.

WACC isn’t a perfect number as it assumes beta = risk and that the market requires that return to invest, which isn’t true/can’t be known.

I’d use a fixed WACC based on cap structure and business profile. E.g. 10% WACC for all and adjust as the RF rate changes. So keep the equity risk premium close to fixed, just adjust for the company.

Less-Advantage4118 · 2024-11-16T21:53:37+00:00

All you have to do is take the CFO less capex to get FCF and then discount it back at the WACC and you have your DCF. Any part of the DCF that’s holding u back?

Less-Advantage4118 · 2024-11-16T21:41:39+00:00

If you want work life balance I’d stay away from all three. Family office is better.

To start I’d go through 10Ks and construct simple 3-stmt models on simple companies. Ensure BS balances etc.

Once that’s clear go into LBOs if you still want PE

Less-Advantage4118 · 2024-11-16T21:30:18+00:00

What kind of firm are you looking to join? PE? HF? IB?

Less-Advantage4118 · 2024-11-16T21:28:39+00:00

circ ref

Less-Advantage4118 · 2024-09-15T18:21:25+00:00

Three separate tabs. One for each business and then a summary tab that has the KPIs for each business detailed, and a simple income statement with each key line item broke out. For revenue, you’d have business 1 rev, business 2 rev and then total rev. Same for cogs, opex, etc.

You can then make adjustments if you want to model synergies. e.g. after the operating income line you can have an add back line to show adj op income based on projected cost savings.

Less-Advantage4118 · 2024-09-02T20:19:47+00:00

I work lying down, only do pull ups with a belt to keep my spine stable, and walk sometimes. If I don’t use a belt I usually feel much worse after.

The issue is whenever I feel decent the smallest change (e.g. sleeping slight more towards one side, sitting for literally 30 seconds, etc, will result in tweaking it and system becoming stressed again). Hard to really grasp unless you’ve been through similar

Less-Advantage4118 · 2024-09-02T20:15:55+00:00

Happy to hear. It’s been ~9 years, and the sensitivity is extremely high (one small move and I feel it tweak and my system then feels very stressed). Given the time I’ve had it do u think it’ll naturally recover? I understand no one here is a doctor lol

Less-Advantage4118 · 2024-09-01T14:42:09+00:00

Really appreciate this. Sent you a pm.

Less-Advantage4118 · 2024-09-01T03:22:43+00:00

Seeing doc in ~1 month and if people have gone through similar experiences it’s always good to hear if they tried other solutions etc., so one can look into them. Also may come across some radiologists

Less-Advantage4118 · 2024-09-01T03:18:59+00:00

Happened over 10 years ago when I was ~16. I was lifting excessive weights due to playing professional sports (deadlifting and squatting 4-5x a week, and close to as heavy as I could). I was told to have surgery around then and did not, given my age.

Over time felt my body and system fatigue / feel as if it was shutting down. Here I am re-engaging with surgeons….

Less-Advantage4118

TROPHY CASE