The Motley Fool Discussion Boards
Learning to Invest / Valuation Strategies
|Subject: Re: Discounted Cash Flow Model - Negative FCF||Date: 2/8/2011 3:04 AM|
|Author: atta9508||Number: 1632 of 1670|
Everybody, thanks for the posts. Since my original post I have looked over the spreadsheets recommend by Moose and have been trying to learn the higrowth DCF model. I have a lot to learn. I have a number of the inputs figured out, but have some questions below.
1) Is the are good rule of them to estimate stable operating margin. I ploted the historic data from the income statement in an attempt to estimate what the operating margin might be in the future. I have been using 5-15 percent depending on the company. Anythoughts?
2) The higrowth model asks "Do you want to use corrent working capital as a percent of revenues for the future?" (Yes/No). Not sure what assumption to use here in %. Any suggestions/reference information would be helpful.
3) Another question in the sheet, "How ould you like capital expenditures to be estimate 1) Grow at same rate as revenues? 2) Lag by two years? 3) Based on a fixed sales/capital ratio.
Not sure which option I should model since they make a huge difference in the valuation. If somebody could explain this to me I would appreciate it. I have tried entering in a ratio based on the following formula, (Sales to Working Capital = sales / working capital). As an example using the above formula I get a stock value of $56/share, vs if I choose (1), I get $-26/share.
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