This was a tremendously helpful video! I have completed numerous DCF models, but when describing how to walk through a DCF I tend to run into the issue of going too far into the weeds. This helped simplify my thinking drastically.
I really enjoyed all the explanation you gave. Very simplified and insightful. I will.appreciate if you can through more ligjt in another video on the following: 1. Do a video on time period less than 1 year from the purchase date in discounting or calculating thr NPV 2. Calculate cost of equity for a private company, given Unlevered and levered beta of comparable companies. Thank you. Esther
Aiming for Investment Banking, Private Equity, or Investment Management Roles? Ramp up faster with our (free) Finance Analyst Starter Kit! - finance-able.com/analyst-starter-kit/ or check out our courses at courses.finance-able.com/
Thanks so much. We have even deeper dives into this and walk me through an LBO in our Analyst Starter kit articles: finance-able.com/analyst-starter-kit/ definitely check these out when you have a sec @matt franks
Glad it was helpful. Btw, happy to give anyone a free copy of our monster IB prep guide…just follow us on Instagram (@survivefinance) and shoot me a dm with ‘IB Prep Guide’ as the message
As you said in the beginning the most common way is to calculate unlevered cfs. What changes would one need to do in case of levered cfs? Subtract intt amount from ebit?
The market trend can turn around very quickly. In fact, the indexes often switch from a bear market to a bull market when the news is at its worst and the mood of investors is at its lowest point. I read an article of people that grossed profits up to $150k during this crash, what are the best stocks to buy now or put on a watchlist?
True, initially I wasn't quite impressed with my gains, opposed to my previous performances, I was doing so badly, figured I needed to diversify into better assets, I touched base with a portfolio-advisor and that same year, I pulled a net gain of 550k...that's like 7times more than I average on my own.
Angela Lynn Shilling a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Appreciate it Algier. If you liked this video, definitely check out our deep dive guide on the same topic here: finance-able.com/walk-me-through-a-dcf/
I am not sure why we need to add cash back in step 5 as the enterprise value (Total Asset Value) already includes cash. It sort of violates the accounting equation of A = L + E. Please let me know if I am wrong. Thanks!
Could you pleaae explain mathematically how its possible that the discounted fcf‘s result in enterprise value. Since enterprize value is the sum of equity + debt - cash, shouldnt it be much larger than the fcfs?
@@Daniel-hd7te enterprise value is simply the purchase price of the business. The purchase price of the business is the price you pay to have the right to all future cash flow as the owner. This is one of the many reasons I don’t love the traditional way of teaching the ‘enterprise value formula’ because it misled you in terms of the underlying substance of enterprise value. In short, the price you pay for an asset and the price you pay for the right to the future cash flow are the same thing
Hello ~ quick question: to get to unlevered FCF, would you add back other non cash expenses besides D+A such as goodwill amortization or stock comp? Thanks a ton!
What are your personal thoughts on WACC and whether or not it should be used? I have heard many investors completely disregard WACC and say its a useless discount rate.
We’ve set this up to be the cleanest answer. You could provide an interview and it’s work for thousands and thousands of people. Of course, there are always variations that you could come up with, but I think if you stick with this, you’ll be in a good spot
Hands down the clearest video I have seen on this topic. Well done 👏👏👏
Thanks so much. For daily content just like this, check out our Instagram (@survivefinance) instagram.com/survivefinance?igshid=YmMyMTA2M2Y=
I agree
This was a tremendously helpful video! I have completed numerous DCF models, but when describing how to walk through a DCF I tend to run into the issue of going too far into the weeds. This helped simplify my thinking drastically.
Glad you found it helpful Will!
The best DCF explanation that i've ever watched. Perfectly structured and detailed. Thank you so much
Glad it was helpful!
Best walk-through of DCF I've watched! Really breaks things down. Super simple to understand.
Thanks so much Priyanka! Really appreciate the kind words and glad you found it helpful
thank you sir. Up until now I knew the pieces of a DCF , this explanation helped to solidify my understanding of the process of a DCF.
Really glad you found it helpful!
The best video on DCF on RUclips !
Thanks so much Davide!
OMG! Never seen such a master class explanation for the most complicated stuff in finance. Thank you Sir!
Glad you found it helpful. We have SO much more free content here: finance-able.com/analyst-starter-kit/
Explanation are beyond this world! Thank you very much.
You're very welcome!
Excited to launch our Walk Me Through a DCF video which boils the question down to 5 simple steps!
I have been struggling to understand how the concepts behind NPV and Enterprise Value- this was so well explained! Thank you 👏👏👏
this is hands down the best DCF explanation ever - thank you!
Thank you so much! Glad you found it helpful!
Best walkthrough I’ve seen, perfect refresher before interviews.
Glad you found it helpful. Best of luck with the interviews!
this is great, really seniors like you and ashwath damadoran make investment banking bearable thank you
Glad it’s helpful…trying to make this stuff clearer
This was so straightforward and digestible, everything clicked after watching this. Thanks so much !!
So glad to hear that Brett! As an aside, I think you’ll
love our courses if you liked this video: courses.finance-able.com/ 😉
Awesome DCF interview answer strategy. Really appreciate the clear framework approach
Glad it was helpful!
A simple and clear explanation. Thank you.
Thank you for this video! It really helped me understand DCF better.
Glad it was helpful!
Can't explain in words , sir how great you are ❤, i am thankful from my depth of heart, please upload more video like this , love from india 🎉
This is amazing, please keep doing god's work. You will help someone land their dream job one day!
That’s the goal! 🙂
For more interview questions, check out our Twitter (@financeable1) where we post a daily interview question and a weekly challenge question!
I really enjoyed all the explanation you gave. Very simplified and insightful.
I will.appreciate if you can through more ligjt in another video on the following:
1. Do a video on time period less than 1 year from the purchase date in discounting or calculating thr NPV
2. Calculate cost of equity for a private company, given Unlevered and levered beta of comparable companies.
Thank you.
Esther
Aiming for Investment Banking, Private Equity, or Investment Management Roles? Ramp up faster with our (free) Finance Analyst Starter Kit! - finance-able.com/analyst-starter-kit/ or check out our courses at courses.finance-able.com/
Great video. Thanks for taking the time to make these!
Thanks so much. We have even deeper dives into this and walk me through an LBO in our Analyst Starter kit articles: finance-able.com/analyst-starter-kit/ definitely check these out when you have a sec @matt franks
Clear and concise video man. Helping me a ton
Glad it was helpful!
Hey man, thank you so much for this video, really helpful stuff. New subscriber 👍
Glad it was helpful. Btw, happy to give anyone a free copy of our monster IB prep guide…just follow us on Instagram (@survivefinance) and shoot me a dm with ‘IB Prep Guide’ as the message
That was cool and simple. Thank you for sharing
The best DCF video !
Thanks so much Rachel. Let us know if you have any questions!
Loved this content!
Thank you so much!
As you said in the beginning the most common way is to calculate unlevered cfs. What changes would one need to do in case of levered cfs?
Subtract intt amount from ebit?
The market trend can turn around very quickly. In fact, the indexes often switch from a bear market to a bull market when the news is at its worst and the mood of investors is at its lowest point. I read an article of people that grossed profits up to $150k during this crash, what are the best stocks to buy now or put on a watchlist?
True, initially I wasn't quite impressed with my gains, opposed to my previous performances, I was doing so badly, figured I needed to diversify into better assets, I touched base with a portfolio-advisor and that same year, I pulled a net gain of 550k...that's like 7times more than I average on my own.
Angela Lynn Shilling a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
How is this relevant
Great video. Thank you 👍
Nice video. Keep going!
Appreciate it Algier. If you liked this video, definitely check out our deep dive guide on the same topic here: finance-able.com/walk-me-through-a-dcf/
great video! Hopefully i crush my interview
Best of luck!
This was really useful!
Thanks so much!
Great video, really helpful
Really glad to hear it was helpful!
If you liked this video, you’ll love our courses: courses.finance-able.com/
Great video! Why ev/ebitda multiple and not ev/ebit or ev/fcf?
Great video. Thank you
Glad you liked it!
nice video really helped me
Glad to hear!
Best video on dcf
Thanks so much! :)
I am not sure why we need to add cash back in step 5 as the enterprise value (Total Asset Value) already includes cash. It sort of violates the accounting equation of A = L + E. Please let me know if I am wrong. Thanks!
EBIT is profit before tax then why we subtract (1-Tax) again while calculating FCFF ??
That allows us to capture the tax deduction from the depreciation expense (ie the depreciation, tax shield)
So, the enterprise value is the sum of all the cash flows present and future?
That’s correct
Could you pleaae explain mathematically how its possible that the discounted fcf‘s result in enterprise value. Since enterprize value is the sum of equity + debt - cash, shouldnt it be much larger than the fcfs?
@@Daniel-hd7te enterprise value is simply the purchase price of the business. The purchase price of the business is the price you pay to have the right to all future cash flow as the owner.
This is one of the many reasons I don’t love the traditional way of teaching the ‘enterprise value formula’ because it misled you in terms of the underlying substance of enterprise value.
In short, the price you pay for an asset and the price you pay for the right to the future cash flow are the same thing
Hello ~ quick question: to get to unlevered FCF, would you add back other non cash expenses besides D+A such as goodwill amortization or stock comp? Thanks a ton!
This is amazing
Glad it was helpful!!
Where do you get the EBITDA Multiple from?
great explenations thank u bro
What are your personal thoughts on WACC and whether or not it should be used? I have heard many investors completely disregard WACC and say its a useless discount rate.
WACC is a super helpful conceptual framework, but it can result in false precision/confidence if taken at face value
very good video
Thanks Joseph!
TOP! Thx!
Awesome video!
shouldn't the step 3 be step 2? because step 2 requires 'r' (preptuity method) which is WACC which is being calculated in step 3
We’ve set this up to be the cleanest answer. You could provide an interview and it’s work for thousands and thousands of people.
Of course, there are always variations that you could come up with, but I think if you stick with this, you’ll be in a good spot
Thanks
Great!
nice!
Thank Y🐱u
Cleeeaann
🙏🙏🙏
Just ask ChatGPT