tag:blogger.com,1999:blog-4631423976894080706.post6216571143964163468..comments2023-10-17T06:55:06.255-04:00Comments on the red corner: Half-term Report Card - Ired.http://www.blogger.com/profile/04089263693762295793noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-4631423976894080706.post-48162552606519011432013-06-07T18:18:12.263-04:002013-06-07T18:18:12.263-04:00Sorry I didn't get to this earlier -- I'm ...Sorry I didn't get to this earlier -- I'm embarrassed to say that I just saw it.<br /><br />Management has laid out the minimum rate of capex for the next few years. It can be found at the IR page in the presentation material. <br /><br />As for the valuation approach, i get business value by applying the following formula: (EBIT-tax)/WACC. red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-65363962338704971162013-05-16T12:09:49.571-04:002013-05-16T12:09:49.571-04:00Thanks for this. That's what I meant -- liabil...Thanks for this. That's what I meant -- liabilities are minuses -- and that's what I did.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-73628006835961023272013-05-16T12:00:27.090-04:002013-05-16T12:00:27.090-04:00Could you explain your valuation table a bit?
j...Could you explain your valuation table a bit? <br /><br />just curious how you "know the rate at which its net operating assets will grow over the next two years" <br /><br />and then i'm not sure i follow the valuation itself... are you using a residual income model to find "business value?" ie Book value + ((ROE - required return)* Book value)<br /><br />thanks.<br /><br />i am intrigued by the competitive landscape and need to do my own work here, but wanted to explore your thoughts.<br /><br />thanksAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-77782702708986757172013-05-16T11:54:47.624-04:002013-05-16T11:54:47.624-04:00"The value of the asset can be capitalized --..."The value of the asset can be capitalized -- 7x rent or 8x rent is about right -- and that capitalized amount should be added to the asset side of the balance sheet and subtracted from the liabilities side of the balance sheet."<br /><br />are you talking about capitalizing an off balance sheet lease? in that case it should be added to the balance sheet as an asset and as a liability. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-54684133620581464202013-04-22T07:28:01.027-04:002013-04-22T07:28:01.027-04:00No idea, I'm afraid, and not for the lack of t...No idea, I'm afraid, and not for the lack of trying to find out.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-63435963814876550372013-04-19T01:43:17.029-04:002013-04-19T01:43:17.029-04:00Any idea if Ranch holds parts of the capital struc...Any idea if Ranch holds parts of the capital structure not reported in the last DEF 14A (warrants, converts)?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-58236703809342070992013-04-09T14:42:49.043-04:002013-04-09T14:42:49.043-04:00Hello,
Thanks very much for your explanation, rea...Hello,<br /><br />Thanks very much for your explanation, really invaluable for someone trying to learn like me.<br /><br />So basically what you do is taking the rent paid as "depreciation" from the assets and that's why it is an operating expense, but you substract the interest because that's a financing cost right? Would it make sense not to capitalise and just substract the interest as a cost of doing business (i.e. operating)<br /><br />In terms of subtracting from liabilities I guess that what you mean is that you add it as debt, correct, because the company must honour that contract...<br /><br />I will read Richard's article. Thanks,<br /><br />ArturoArthttps://www.blogger.com/profile/14433175013018501264noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-49298635470515831472013-04-08T10:17:29.743-04:002013-04-08T10:17:29.743-04:00Thanks for the question:
Companies rent equipment...Thanks for the question:<br /><br />Companies rent equipment as an alternative to buying it outright. Rental expense consists of two components: the value of the asset (which is depreciated) and the value of the financing charge (which is an implied interest expense). <br /><br />The value of the asset can be capitalized -- 7x rent or 8x rent is about right -- and that capitalized amount should be added to the asset side of the balance sheet and subtracted from the liabilities side of the balance sheet. Doing that gives one a much better sense of the underlying economics of the business, the so-called "fundamentals". <br /><br />The implied interest charge embedded in the total rent expense is usually included in form 12 of the company's 10-K filing. If it isn't and you want to work it out by hand, Richard Beddard has a very clear explanation here:<br />http://www.iii.co.uk/news-opinion/richard-beddard/share-sleuths-notepad-finding-hidden-debt red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-12034822015050566212013-04-08T10:02:48.586-04:002013-04-08T10:02:48.586-04:00Thanks a lot for this. I can see you replace Aircr...Thanks a lot for this. I can see you replace Aircraft Rent for Aircraft Rent - Lease Interest. What does this mean?<br /><br />Sorry if I'm abusing a bit, please feel free to ignore me :-)Arthttps://www.blogger.com/profile/14433175013018501264noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-32956608726868720372013-04-05T11:18:17.579-04:002013-04-05T11:18:17.579-04:00Sure, here's a link to a spreadsheet. The 2nd ...Sure, here's a link to a spreadsheet. The 2nd tab has the raw data.<br />https://docs.google.com/spreadsheet/ccc?key=0AoCLhoPnjQDgdGhVWHJIYTh3cFRVTUcwWkxPNWwwM2c#gid=6<br /><br />Operating income = EBIT, so remove all nonoperating and financing costs: lease interest expense, which you can find in the 10-K Form 12; pension liability interest expense; amortization of acquired intangibles like trade names, etc.<br /><br />I have chose to include fuel hedging losses as an operating expense.red.https://www.blogger.com/profile/04089263693762295793noreply@blogger.comtag:blogger.com,1999:blog-4631423976894080706.post-1084817044561476042013-04-05T11:02:27.896-04:002013-04-05T11:02:27.896-04:00Hello, I'm trying to follow up on your numbers...Hello, I'm trying to follow up on your numbers above... How do you come up with the Pretax Operating Income? The nearest I get is by taking the Operating Income from the 10K and adding up D&A, but still don't get your figures... Would really appreciate if you could shed some light as I'm trying to reproduce your valuation model.<br /><br />Thanks!Arthttps://www.blogger.com/profile/14433175013018501264noreply@blogger.com