Presented by

Muhammad Imran
1st Semester(MS)

Assumptions
Sales growth
Current assets/Sales
Current liabilities/Sales
Net fixed assets/Sales
Costs of goods sold/Sales
Depreciation rate
Interest rate on debt
Interest paid on cash and marketable securities
Tax rate
Dividend payout ratio

Year

10%
15%
8%
77%
50%
10%
10%
8%
40%
40%
0

1,000
(500)
(32)
6
(100)
374
(150)
225
(90)
135

1,100
(550)
(32)
9
(117)
410
(164)
246
(98)
148

1,210
(605)
(32)
14
(137)
450
(180)
270
(108)
162

1,331
(666)
(32)
20
(161)
492
(197)
295
(118)
177

80
150

144
165

213
182

289
200

1,070
(300)
770
1,000

1,264
(417)
847
1,156

1,486
(554)
932
1,326

1,740
(715)
1,025
1,513

80
320
450
150
1,000

88
320
450
298
1,156

97
320
450
460
1,326

106
320
450
637
1,513

Income statement
Sales
Costs of goods sold
Interest payments on debt
Interest earned on cash and marketable securities
Depreciation
Profit before tax
Taxes
Profit after tax
Dividends
Retained earnings
Balance sheet
Cash and marketable securities
Current assets
Fixed assets
At cost
Depreciation
Net fixed assets

Total assets
Current liabilities
Debt
Stock
Accumulated retained earnings

Total liabilities and equity

Free cash flow calculation

Profit after tax
Add back depreciation
Subtract increase in current assets

246
117
(15)

270
137
(17)

295
161
(18)

Add back increase in current liabilities

Subtract increase in fixed assets at cost
Add back after-tax interest on debt
Subtract after-tax interest on cash and mkt. securities
Free cash flow

Year
Profit after tax
Add back depreciation
Subtarct increase in current assest
Add back increase in current liabilites
Subtract increase in fixed assests at cost
Add back after tax interest on debt
Subtract after tax inteest on cash and mkt securities
Free cash flows
Equity value
WACC
Long term growth
FCF

Enterpise value
Year back cash
Value of assests
Book value of debt
Value of Equity

8
(194)
19.2
(5)
176

9
(222)
19.2
(9)
188

10
(254)
19.2
(12)
201

246
117
(15)
8
(194)
19.20
(5.3687)
176

270
137
(17)
9
(222)
19.20
(8.5660)
188

295
161
(18)
10
(254)
19.20
(12.0485)
201

20%
5%

176

188

201

176

188

201

$1,348
$80
$1,428
($320)
$1,108

Sensivity Analysis
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%

12%
13%
14%
15%
16%
17%
18%
19%
20%
21%
22%
23%
24%
25%

1,464
(732)
(32)
26
(189)
538
(215)
323
(129)
194

1,611
(805)
(32)
33
(220)
587
(235)
352
(141)
211

371
220

459
242

2,031
(904)
1,127
1,718

2,364
(1,124)
1,240
1,941

117
320
450
830
1,718

129
320
450
1,042
1,941

323
189
(20)

352
220
(22)

11
(291)
19.2
(16)
214

12
(333)
19.2
(20)
228

323
189
(20)
11
(291)
19.20
(15.8260)
214

352
220
(22)
12
(333)
19.20
(19.9068)
228

214
214

$1,108
1104.93903
1109.44449
1112.9166
1115.29274
1116.50733
1116.49293
1115.18017
1112.49776
1108.37243
1102.72895

228
1598.15972
1,826

1095.49007
1086.5765
1075.90692
1063.39789
1048.96391
1032.51732
1013.96834
993.224987
970.193094
944.776268
916.875873
886.390998
853.218442
817.252686

Negative Cash Balance

Sales growth
Current assets/Sales
Current liabilities/Sales
Net fixed assets/Sales
Costs of goods sold/Sales
Depreciation rate
Interest rate on debt
Interest paid on cash and marketable securities
Tax rate
Dividend payout ratio

Year

20%
20%
8%
80%
50%
10%
10%
8%
40%
50%
0

Sales
1,000
Costs of goods sold
(500)
Interest payments on debt
(40)
Interest earned on cash and marketable securities
6
Depreciation
(100)
Profit before tax
366
Taxes
(147)
Profit after tax
220
Dividends
(110)
Retained earnings
110

1,200
(600)
(40)
4
(124)
440
(176)
264
(132)
132

1,440
(720)
(44)
1
(156)
522
(209)
313
(157)
157

1,728
(864)
(52)
0
(194)
618
(247)
371
(185)
185

2,074
(1,037)
(61)
0
(242)
734
(294)
440
(220)
220

(0)
288

(0)
346

(0)
415

Income statement

Balance sheet
Cash and marketable securities
Current assets
Fixed assets
At cost
Depreciation
Net fixed assets

Total assets
Current liabilities
Debt
Stock
Accumulated retained earnings

Total liabilities and equity

Free cash flow calculation

Profit after tax
Add back depreciation
Subtract increase in current assets

80
150

28
240

1,100
(300)
800
1,030

1,384
(424)
960
1,228

1,732
(580)
1,152
1,440

2,157
(774)
1,382
1,728

2,675
(1,016)
1,659
2,074

80
400
450
150
1,080

96
400
450
282
1,228

115
436
450
439
1,440

138
516
450
624
1,728

166
614
450
844
2,074

264
124
(90)

313
156
(48)

371
194
(58)

440
242
(69)

Add back increase in current liabilities

Subtract increase in fixed assets at cost
Add back after-tax interest on debt
Subtract after-tax interest on cash and mkt. securities
Free cash flow

Year
Profit after tax
Add back depreciation
Subtarct increase in current assest
Add back increase in current liabilites
Subtract increase in fixed assests at cost
Add back after tax interest on debt
Subtract after tax inteest on cash and mkt securities
Free cash flows
Equity value
WACC
Long term growth
FCF

Enterpise value
Year back cash
Value of assests
Book value of debt
Value of Equity

16
(284)
24
(3)
51

19
23
28
(348)
(425)
(518)
26.1757 30.9497958 36.8176686
(1)
(0)
(0)
118
137
159

264
124
(90)
16
(284)
24.00
(2.5928)
51

313
156
(48)
19
(348)
26.18
(0.6728)
118

371
194
(58)
23
(425)
30.95
(0.0000)
137

440
242
(69)
28
(518)
36.82
(0.0000)
159

20%
5%

51

118

137

159

51

118

137

159

$961
$80
$1,041
($400)
$641

Sensivity Analysis
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%

$641
$951
949.658686
946.468104
941.8366
935.685772
927.935027
918.501554
907.300295
894.243921
879.242801
862.204977

13%
14%
15%
16%
17%
18%
19%
20%
21%
22%
23%
24%
25%
26%
27%
28%
29%
30%
31%
32%
33%
34%
35%
36%
37%
38%
39%
40%
41%
42%
43%
44%
45%
46%
47%
48%
49%
50%
51%
52%
53%
54%
55%
56%
57%
58%
59%

843.036136
821.639584
797.915572
771.763843
743.079695
711.756748
677.685929
640.755679
600.851865
557.857754
511.653986
462.118544
409.126731
352.55114
292.261629
228.12529
160.006424
87.7665143
11.2641991
-69.644757
-155.10749
-245.27406
-340.29749
-440.33378
-545.54194
-656.084
-772.12509
-893.8334
-1021.3803
-1154.9401
-1294.6906
-1440.8126
-1593.4901
-1752.9105
-1919.2644
-2092.7457
-2273.5515
-2461.8827
-2657.943
-2861.94
-3074.0846
-3294.591
-3523.6772
-3761.5644
-4008.4776
-4264.6453
-4530.2996

5
2,488
(1,244)
(73)
0
(299)
872
(349)
523
(262)
262

(0)
498
3,306
(1,315)
1,991
2,488
199
734
450
1,106
2,488

523
299
(83)

33
(631)
44.0185019
(0)
186

5
523
299
(83)
33
(631)
44.02
(0.0000)
186

5
186
1298.73162
1,484

Forecasted statement
Sales growth
Current assets/Sales
Current liabilities/Sales
Net fixed assets/Sales
Costs of goods sold/Sales
Depreciation rate
Interest rate on debt
Interest paid on cash and marketable securities
Tax rate
Dividend payout ratio

Year

10%
15%
8%
77%
50%
10%
10%
8%
40%
40%
0

Sales
1,000
Costs of goods sold
(500)
Interest payments on debt
(32)
Interest earned on cash and marketable securities
6
Depreciation
(100)
Profit before tax
374
Taxes
(150)
Profit after tax
225
Dividends
(90)
Retained earnings
135

1,100
(550)
(29)
6
(117)
411
(164)
247
(99)
148

1,210
(605)
(28)
6
(137)
445
(178)
267
(107)
160

1,331
(666)
(28)
6
(161)
483
(193)
290
(116)
174

1,464
(732)
(30)
6
(189)
520
(208)
312
(125)
187

80
150

80
165

80
182

80
200

80
220

1,070
(300)
770
1,000

1,264
(417)
847
1,092

1,486
(554)
932
1,193

1,740
(715)
1,025
1,305

2,031
(904)
1,127
1,427

80
320
450
150
1,000

88
287
419
298
1,092

97
284
354
458
1,193

106
276
289
632
1,305

117
302
188
819
1,427

0.53

0.40

0.35

0.30

0.30

Income statement

Balance sheet
Cash and marketable securities
Current assets
Fixed assets
At cost
Depreciation
Net fixed assets

Total assets
Current liabilities
Debt
Stock
Accumulated retained earnings

Total liabilities and equity

Target D/E Ratio

5
1,611
(805)
(33)
6
(220)
559
(224)
335
(134)
201

80
242
2,364
(1,124)
1,240
1,562
129
331
82
1,020
1,562
0.30

Enterprise Value
$1,200

$1,000

$800

$600

Enterprise Value

$400

$200

$0
1

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25