Many companies don't split up their capital expenditures between maintenance and growth. In the new ederation, in the tool box, we're going to default it to 50 % of capital expenditure is maintenance. So if chapole's line says 200 million dollars, and i don't know any better, i'll use 100 million for their maintenance capital expenditure. If i go to the ten k for chapole, i can find one of the ten kairs, two thousand 15, they wrote out what their capital expenditures actually were. Turned out it was 57 million. so if i have that number, then i'm going to use that number to determine what the owner earnings are for chapole
You’ve done the initial Four Ms analysis of companies on your watchlist, but your work is not complete. The next step in the researching process is critical, and tells you whether or not the business is worth purchasing. Being at this point in your analysis means that you’re highly confident that the company is going to be larger and more productive in ten years. Today, Phil and Danielle discuss this next step in the research process, and cover how to calculate margin of safety using the ten cap valuation process.
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