Whew, that is a lot of questions. I’m glad you’re interested though. I will try my best to address all of them.
-
I don’t remember this. But if you are asking if only Long Term Debt should be taken, the answer is yes. Short Term Loans are Working Capital Loans, which will be captured by your Capital Turnover Ratio.
-
Corporate Debt Ratings are tricky. Because like I mentioned earlier, India has a very poor Debt Market. So, the least you could do is try to find a company in the same broader industry (Food). If that’s not possible, make a wild guess. I don’t think a few percentage points would make much of a difference. I’ve changed it to 8.50% now, and it didn’t make much of a difference. But I’ll let it be at that level anyway.
-
On second thought, yes. It should be 724.25 (655.01+69.24). My bad.
-
I think I’ve taken Other Financial Assets + Prepayments. You can see from their earlier AR that Other Financial Assets are Term Deposits. Prepayments are prepaid Lease Expenses (Meaning, they won’t have to pay these later). I guess you could consider Prepayments part of WC if you want to, as well (Meaning, ignore it here, but make it part of your Capital Turnover calculation).
-
This is to avoid abnormalities caused by the bull market. You can see in my post above that even if I’d calculated for a 3-year period, I’d not have been far off. Oh well.
-
Very good question. But no. The FCFF already excludes taxes paid by the company. Since you are discounting this figure, you need not adjust for tax again. Even if you use the WACC, the Cost of Equity is calculated tax-free. Only the Cost of Debt is adjusted for Tax, because Interest Expenses can be adjusted to reduce Tax for the company.
-
I think I took the FY18 Finance Cost of 69.24 and made some proportionate adjustments based on how much of the Debt is Short Term Debt Vs Long Term Debt (Basically remove the interest component paid on Short Term Debt)
-
Yes, again, I made some proportionate changes based on FY18 AR (One thing I do remember doing is that I reduced the maturity of the old loans by 1 year). We can’t be accurate about this unless the full FY18 AR is released.
-
Same as above.
-
You can check here. I’ve averaged all the existing loans and multiplied them by 0.14. I do not remember what 0.14 is, although I could have just made adjustments based on how much Long Term Debt increased from FY17 to FY18 (So, accounting for an additional component of Long Term Debt which we don’t know).
-
Absolutely, nice catch! I must have dragged the cell or something, since the closest cell got selected. I have corrected the formula now.
-
It’s not, but it doesn’t matter. For calculating actual Reinvestment Rate, I will have to create entry cells for Assets and Liabilities figures. So, I let go of accuracy for the sake of simplicity. The formula you see here is the same one you see in G31 - the Marginal Reinvestment Rate. I could also try to calculate it based on iterative calculations in excel (Based on Sales, Previous Sales, Capital Turnover and Post-Tax Operating Profit). Let me change that in the original upload. Hopefully, it should be fine. Edit: Just checked, it’s okay now, although this cell will also throw a circular reasoning error whenever someone opens in for the first time.
-
Oh, interesting. I use MailChimp, which is known to have problems with Google. Have you subscribed to my blog? If yes, does the pop-up appear still? I can change the type of pop-up if that is the case (Something less intrusive). If you haven’t subscribed, I’m afraid I can’t change much.
P. S. I have changed my model a little based on your input. Thanks a lot. You can find the updated version in the same link - Numbers and Narratives.