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Looking at a valuation of Manx Telecom MANX - confusion over impairment

Analysing companies' finances and value from their financial statements using ratios and formulae
TheMotorcycleBoy
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Looking at a valuation of Manx Telecom MANX - confusion over impairment

#178825

Postby TheMotorcycleBoy » November 7th, 2018, 5:20 pm

Hi everyone,

I'm looking at an attempt at doing a DCF and a EPV valuation of MANX, this evening. So for the EPV, some of the ingredients are Amortisation and Depreciation (A&D), but when I look for them on page 42 in the statement of cash flows taking the 2013 report as an example, found here, I see not just A&D, but also an additional entry for "Impairment of PPE".

This is what we see:



So all I want to know is should I, for the purposes of the EPV calculation, handle the Impairment entry in exactly the same way as A&D? Upon reading Note 4. I believe I'd be justified to act as so - but I wondered if anyone else could confirm.

many thanks
Matt

PS does anyone know how I can make my tables look more sane, i.e. not pad the first column with w/s and instead left justify all my columns?

tjh290633
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Re: Looking at a valuation of Manx Telecom MANX - confusion over impairment

#178847

Postby tjh290633 » November 7th, 2018, 7:14 pm

My method with tables is to have the details in a spreadsheet, then just copy into a [pre] format box in the Lemon Fool Financial Software tool, found at http://lemonfoolfinancialsoftware.weebl ... ormat.html

I replace the column separator with three spaces, and put a full stop in any empty cells in the header row.

Numbers are usually right justified and text left justified.

TJH

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Re: Looking at a valuation of Manx Telecom MANX - confusion over impairment

#178898

Postby Gengulphus » November 8th, 2018, 3:10 am

TheMotorcycleBoy wrote:PS does anyone know how I can make my tables look more sane, i.e. not pad the first column with w/s and instead left justify all my columns?

I have posted a reply to this at viewtopic.php?f=21&t=14640, on the Biscuit Bar rather than this board because it's about an aspect of using TLF rather than fundamental analysis. And I'm afraid I know nothing about the EPV technique and so don't have anything to say about the main question, and won't until and unless I take a good look at it - which I'm afraid is unlikely to be anytime soon!

No criticism of TJH's answer, by the way - which one prefers is probably a matter of taste, and might vary between posts. For instance, I generally don't use mine on the Games, Riddles and Puzzles board, because the use of tables is incompatible with what is now the standard way of hiding 'spoilers' there...

Gengulphus

TheMotorcycleBoy
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Re: Looking at a valuation of Manx Telecom MANX - confusion over impairment

#178905

Postby TheMotorcycleBoy » November 8th, 2018, 6:14 am

Thanks for both of your suggestions, regarding the tables, people. Will have a better play with them some time. I've certainly found, for my current exploits in TLF, using "table" instead of "pre" is far easier for quickly pasting across spreadsheet stuff.

When I used "pre" I found I'd take ages inserting space to get the desired appearance. At least with "table" construct I'm now able to get entries aligned much faster, with less fuss. I just need to work on the minutiae of the presentation!

Matt

TheMotorcycleBoy
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Re: Looking at a valuation of Manx Telecom MANX - confusion over impairment

#179534

Postby TheMotorcycleBoy » November 11th, 2018, 7:19 pm

Back to my original post. I decided to read up more about the difference between depreciation and impairment, e.g. here:

https://www.investopedia.com/ask/answer ... irment.asp
https://www.morganintl.com/blog/account ... equipment/

I think I get it. Depreciation is to account for the idealised reduction of value of a fixed asset. e.g a machine is purchased at cost £50k and with straight line depreciation terms will end it's useful in 5 years. Thus for each year the company can apply a depreciation charge of £10k for this item.

Impairment is when the item's real value "recoverable amount" has fallen to a figure less than the "carrying amount" in the company's financial statements. In the above example, I suppose that after only 2 years although the company have assumed -£20k less in value due to orderly depreciation, it could well be that the company made a bad investment buying the thing for £50k in the first place.......and actually is now worth less than the implied £50-20k value it would logically carry on the firms BS after this 2 years usage period.

Comments/critique welcomed.


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