*As I mentioned in the video, here are some further explanations of some of the concepts I brought up:* *Capital Expenditures (CapEx)* - Cash you spend on Plant, Property, and Equipment (PP&E). So Apple spends $100 million on a new office building, that's $100 million of Capital Expenditures. CapEx is NOT found in your income statement because they are usually really large one-time expenses and the income statement tries to capture expenses that occur regularly. Instead, the costs of CapEx are depreciated over time (see below). *Depreciation & Amortization (D&A)* - In the CapEx example, if Apple bought a new building for $100 million and that building had a "useful life" of 20 years, the annual D&A would be $100 million / 20 = $5 million a year. D&A IS found in your income statement either embedded into COGS or Operating Expenses. D&A allows you to fairly deduct CapEx spend over a period of time but it's not actual cash that you're spending (instead the actual cash was a one-time payment in CapEx). *Net Working Capital (NWC)* - For a DCF, this is your current OPERATING assets (i.e. excludes cash, includes assets like inventory, accounts receivable, etc.) minus your current OPERATING liabilities (i.e. excludes debt, includes accounts payable, deferred revenue, etc.). Standard definition for NWC is just current assets minus current liabilities but there's a difference for the DCF. NWC looks at the regular cash inflows and outflows from a company's day to day operations. *WACC Formula* - As a reminder, this is your (% of equity * cost of equity) + (your % of debt * cost of debt * (1 - Tax rate)). % of equity means [equity value / (equity value + debt)]. cost of equity is found through the CAPM formula (risk free rate + beta * market risk premium). % of debt is [debt / (debt + equity value)]. You multiply the debt part times 1 - tax rate because interest payments are tax deductible. 💰Get Free Money💰 ► Coinbase - Get $10 in Free Bitcoin: coinbase.com/join/chon_df?src=ios-link ► Moomoo - Get 2 Free Stocks: j.moomoo.com/005RTE ► Webull - Get 2 Free Stocks: act.webull.com/invite/share.html?inviteCode=5gwmzRWoEVWd ► Schwab - Earn up to $500: www.schwab.com/public/schwab/nn/refer-prospect.html?refrid=REFERBYVYKMZ6 ► Blockfi - Get up to $250: blockfi.mxuy67.net/Keje6z ► Audible - 30 Day Free Trial (Unlimited Audio Books!): amzn.to/3u8aBLq

@tilloberto

3 жыл бұрын

Hey Ben, thanks for all the explainations. I was wondering whether JPM really uses CAPM model and not a more advanced one as other tier 1 banks. It seems too simple to me :D Keep up the good work!

@qwertz9501

2 жыл бұрын

i am missing an explanation of the following term: cost of debt would highly appreciate it.

@lukebarmakian3200

Жыл бұрын

@@qwertz9501 cost of debt (i think) would be the interest rate that theyre paying on debt, its like how much its costinf them to borrow money.

Hi Ben, I am a year-one LSE student. So many of our students are trying to get into investment banking and it's really nice of you to provide free contents. Thank you so so so so so so much!

I took a 9hr course on DCF and you cleared my problems in 18mins. Thank you so much

@rareliquid

3 жыл бұрын

good to hear! haha

It is crazy how helpful this channel has been for me over the past couple months. From learning about a career in investment banking a few months ago to helping me prepare for a finance quiz I have tomorrow… The high quality of your videos isn’t going unnoticed and I don’t doubt this channel will really blow up soon!

Your explanation is incredibly amateur-friendly and is definitely interesting that it made me watch the entire thing at 2.30am in the morning. Really appreciate your dedication and knowledge and I am excited to watch your other videos and those upcoming ones! 😁

Started watching back your live stream of how to build one of these models. Extremely helpful. Have been looking for a while around this topic, however have found your walk through on the live stream and explanation in this video to be one of the best ive found. Appreciate it.

Thanks so much! Super helpful in preparing for a corp fin interview - concise and to the point. Also thanks for including text boxes - makes it much easier to write down notes 😊

Really helpful. I’m 17 trying to get into this and your channel is so helpful

Very helpful! I really like that you added explanation and how you use the DCF model at work .

I’ve been waiting for this. Thank you for doing ittttt

@rareliquid

3 жыл бұрын

no prob!

Love your teaching!!! so simple and clear :)

DUDE I needed this like last week!! The struggles I had at work trying to figure this out 😂😂

really appreciate this content. looking forward to future contents like this

Thank you for clarifying the concepts of DCF and WACC. it is very helpful to a non-business student earning an MBA.

Appreciate the work and effort in explaning the concepts!

Nice and simple breakdown. Great job. This would be useful for people who are learning

3:40 HOW MUCH CASH it coudl generate bike analogy 6:15 candidates for dcf 8:45 unlevered 10:00 perpetuity what was used at JPM 12:00 wacc ranges 12:15 fcf most assumption heavy part of the dcf BAM SEC allows you to import balance sheet as spreadsheet

Thanks for sharing. Very articulated piece

great informative videos and appreciate the added video effects you do to make it more appealing

Thanks for this! You're a good teacher! 👍🏾

Thank you so much for your video, Ben. I like it a lot, especially the way you explain and communicate. Love it and will be your loyal follower

@rareliquid

3 жыл бұрын

no problem and thank you for the support!

Favorite kind of videos!! keep it up man!

@rareliquid

3 жыл бұрын

thanks! will do

Your content is great man!!

Thanks Ben for sharing precious information as always!

@rareliquid

3 жыл бұрын

no prob~

You are super helpful! Thank you so much for this!

Thank you for this! Super helpful and useful- loving the IB insights.

@rareliquid

3 жыл бұрын

Glad it was helpful!

Great video, thank you for sharing it. Congrats!

Thank you for this great video, I love the formatting

@rareliquid

3 жыл бұрын

Glad you enjoyed it!

Love the videos. Keep em coming!

@rareliquid

3 жыл бұрын

Thanks Andrew!

It was pretty much helpful 👍🏻👍🏻

Thank you, This video is very helpful, I'll learn many thing from your channel

Very clear explanation, extremely helpful ！ thanks a lot ~~~~

Interviewer: Walk me through a DCF Me: hold my rareliquid subscription

@rareliquid

3 жыл бұрын

LOL

@richieg.3192

3 жыл бұрын

Interviewer: What's the best method for calculating Terminal Value? Ben: Perpetuity Growth Method is without a doubt the absolute best method Interviewer: Why? Ben: It's the only method I've used.

Content keeps getting better and better🙌🏼

@rareliquid

3 жыл бұрын

thanks!

Thank you!!

You are the best bro

Fire video, thank you.

Good video, very helpful for my group work haha, thanks

Really great video! I personally look at forecasting and DCF as two different parts of an analysis

Eyyyyyy glad to see my fellow bear. Go Bears! , instant sub.

Thanks for sharing Ben. I'll be greatful if you do a series about finance for beginners😍

Love your videos so much!

@rareliquid

3 жыл бұрын

Thank you so much!

great explanation, rareliquid!

@rareliquid

3 жыл бұрын

thank you anna!

Amazing!

Thanks It very helpful

Very helpful! Thank you!

@rareliquid

3 жыл бұрын

np sara!

great video very informative

You rock, dude. 😊

thanks more then a lot (= keep up the grind: its unique

Love this kind of videos

@rareliquid

3 жыл бұрын

good to hear!

Thanks, your video help me a lot thanks

finally! this is exactly what i need ;p

Great Video! Even that i am advanced in this field, i kind of enjoyed the explanation. More of that !!👍

This is helpful...assisted me in my home work

This was extremely helpful! I’d love more basic corporate finance videos and examples. Looking forward to your next vid🙂

@rareliquid

3 жыл бұрын

thanks daniel!

Love ur videos better than my professors~

Great video, keep it up!!

@rareliquid

3 жыл бұрын

Thanks!

Thank you

Hi I'm recently getting my 1st year Finance classes started in GWU, I'm really nervous and stressful but after learning from your video at least I can have a little bit more confidence on prep for what I will learn in the upcoming classes! Thank you for YOUR useful content!

nice content !

This is amazing bro as a trader this gives you an edge when it comes to trading and valuations thanks a lot brother

This is higher quality that the materials I was given at Uni.

absolutely clear! Could u plz make M&A transactions on the next one?

Here before rareliquid reaches 1M 🤩

Leaving some love in the comments!

@rareliquid

3 жыл бұрын

thank you!

Good Job!

@rareliquid

3 жыл бұрын

Thanks!

I would of lover to seen you use the exit multiple. And fcf gives us market value too, I've seen ppl use a terminal multiple times the fcf to get market cap.

Thanks:)

How would you go about projecting NWC, EBIT, and Capital Expenditures?

Hi Ben. I am late to this video but have watched it thoroughly and would like to thank you for the great knowledge shared. Could you please tell me how you arrived at the exact number for years 2021 and 2022 for the Unlevered FCF. I understand the equation but am struggling to arrive at the same numbers of 4,535 and 7,500 respectively, as you did. Thanks a lot!

Thanks for the great video. I have a question: Why would you choose to discount the cash flow over 5 years versus 10 years? This would make a huge difference of the value, so how do you decide how many years to discount?

awesome!

@rareliquid

3 жыл бұрын

Thanks!

Thank you for the video. It was simple and clear. Also, will you be posting a excel sheet with a templete for DCF?

Very valuable content! I'm trying to go into IB but it's hard if you're 29 yo with no prior exp in that field. My goal is to get an internship (doesn't have to be in a BB oder top tier bank) and I'm trying to increase my chances by completing an IB course on udemy. Keep going with your content! I like them, new sub here👍

Great explanation. Subscribing ✅

@rareliquid

2 жыл бұрын

Awesome, thank you!

Really good video! Very informative and easy to understand. But i realised that i really have to up my finance english skills. Some definitions you gave were a little fast for me. But thats not your fault!

Brother, you are doing such a great thing. Thank you so much. i would like to request you to bring some more videos on financial analysis. if you are free then please try to make details explanation with some examples in excel.

Great video. Where did you get the growth rates from?

Hello, just discovered and subscribed to your channel 😉 you mentioned DCF applied to biotech companies. Could you please share one of such DCF? I am working in a pharma company and I am very interested in this topic, thank you very much

Great video! Would really appreciate if you could also make some videos on LBO analysis and other valuation methods.

@rareliquid

3 жыл бұрын

i did post about comparable comps already but probably won’t do one on lbo or precedent transactions because they’re not really relevant for most retail investors

hi ben can you make a video teaching us how to calculate exact terminal growth rate of company

Can you teach us other valuation methods like ratios and other stuff.

Great content and love the animations in your presentation. "Off-White vibes"

Great video, thank you! Can you tell us a bit more about how did you build up your excel sheet so that you can import the data from PDFs? Thank you!

@rareliquid

3 жыл бұрын

if you go to bamsec and sign up either for the free trial or by paying you can download the data to excel

Great video! Do you have a DCF spreadsheet calculator that you recommend for beginners?

What’s the best way for one to take a deep dive into this and become competent

Love from India 🇮🇳

Waiting for the advanced DCF Model :)) Thanks a lot

@rareliquid

3 жыл бұрын

coming soon~

Is terminal value not used when calculating actual share price? I thought it was but I am confused about where is it included in the equity value calculation

Cool.

Could you please mention how did you move your borders in slides? I have searched everywhere but not able to find it. Please.

very useful video. My question is based on what you make your assumptions ?

5:21 8:08 cf. Stable top line rev Enterprise value means the same thing as intrinsic value? 'Relatively predictable'

yo could you do a dcf or how you would value stocks that operate at a loss like coinbase?

You saved me for my finance final

@rareliquid

2 жыл бұрын

Hey Sydney! Glad I could help

Damn bro wanna be my tutor 😂🤣 studying this in uni rn 👏😎

Thanks Liquid! Was curious if you factor in FDA/patent expectations in doing a DCF for pharma companies?

@rareliquid

3 жыл бұрын

yes patent expiration results in a huge drop in revenue and cash flows and trial success probabilities are applied as well

Can you do more examples and analysis of companies? Like a top down analysis of Ali Baba stock and then a DCF on it. Thanks!

Request to also put up This kinda series on LBO you did for 6.1 Bn deal

i guess the crypto startup use similar valuation model now. it's a great explanation to a outsider like me who is currently trying to propose a valuation for fundraising event. thanks a lot