Financial Modeling and Valuation for Post-Employment Benefits

Financial Modeling for DC Plans Modeling DC plan expenses is integrated within operating expense predictions. By forecasting SG&A (Selling, General, and Administrative) expenses, you are indirectly also modeling the DC plan expenses for employees within those operations. The reason this…

More Details
Effects of Post-Employment Benefits on Financial Statements

Post-employment benefits are provisions offered by employers to their retired employees. These benefits can have various implications on an organization’s financial statements. Nature of Post-Employment Benefits Types and Overview Post-employment benefits can be in the form of cash benefits like…

More Details
Share-Based Compensation in Financial Statement Modeling and Valuation

Share-based compensation is usually integrated into operating expenses on the income statement based on an employee’s role. When forecasting operating expenses or margins, analysts often implicitly consider share-based compensation. If, for instance, Research & Development (R&D) expense, which includes a…

More Details
Accounting for Share-Based Compensation

Share-based compensation is a form of remuneration where employees or other stakeholders are granted equity or options to acquire equity, often in the form of company stock. This method aligns the interests of employees with those of shareholders and does…

More Details
Active Currency Trading Strategies

This section will explore tactical decisions a portfolio manager can make regarding currency risk management. These decisions are driven by the Investment Policy Statement (IPS), which grants the manager some flexibility in handling the portfolio’s currency risk. This flexibility can…

More Details
Market-Based Valuation

Analysts frequently attempt to calculate the value of private companies by referencing market-based multiples derived from comparable public companies' stock shares. This approach is favored over the income-based valuation method discussed earlier. While, in some instances, these multiples are modified…

More Details
Income Approach Methods of Private Company Valuation

In earlier sections, we discussed adjusting valuation parameters for private companies, including income normalization and required rate of return changes. After determining the firm's value, control, and marketability, premiums or discounts may be applied based on the evaluator's perspective and…

More Details
How Current Rate Method and the Temporal Method Affect Financial Statements and Ratios

Both the current rate and temporal methods have a significant impact on the parent company’s financial statements and ratios. The following example demonstrates the effects under each translation method. Example: Effects of Using the Current Rate and the Temporal Methods…

More Details
Effects of Accounting for Stock Grants and Stock Options

A company might grant stocks to employees either outright, with restrictions, or contingent on performance. 1. Outright Grants As the wording suggests, outright grants are stocks awarded to employees outrightly, without any conditions. Compensation expense is reported based on the…

More Details
Effects of a Defined Benefit Plan’s Assumptions on the Defined Benefit Obligation and Periodic Pension Cost

Understanding the effects of assumptions on the estimated pension obligation and periodic pension costs helps in the interpretation of a company’s financial statements. Moreover, it aids in the evaluation of whether the assumptions are relatively conservative or aggressive. The amount…

More Details