1. Stock valuation - A comparison of estimated values and marketprices Slim Perkins, a business journalist, is a recent hire at his firm, Since he joined the firm, he has been following Facrbook inc.y (Fa) initial putic offering (IPO) and the stock's performance. His task is to estimate Facebook's fair market value, aiso referred to as "intrinsic" value, and campare this value with the current stock price, and recommend a buy, sell, or hold rating to investors, Silim puits the compury's censoldated financial ataterents to collect relevant data on the company's histerical financial performance. He notices that the company assumes a 45% marginal tax rate after the Ino, and mentions that the compary projects that user ratri and reveri growth will decline over time. Slim starts his evaluation by calculating ratios of costs and expenses to revenues. intereut expense to revenues, and ohers that mil form the set of assumptions in his analysis which will be used to calculate free cash fiows: Sowrce: Facebook loc, Prespectus. United States Seourites and Exchanpe Conmisson, 17 Mar 2012 . Web. 1 zane 2012 hetp://hww.sec-gov/Achlives/edgav/datav1326601/000119312512240111/62679540424be intmalec/ Complete the fowowing tabie. Cash flows from operating activities Net income Adjustments to reconcile net Depreciation and amortization Loss on write-off of assets Share-based compensation Other adjustments Changes in assets and liabilities: Accounts recelvable : (2011(inmilions)2010(inmilions)2005 Prepaid expenses and other current assets Other assets Accounts payable: Platform partners payable Accrued expenses and other current liabilities Deferred revenues and deposits Other liabilities Net cash provided by operating activities Cash flows from investing activities Purchases of property and equipment Purchases of marketable securities Other liabilities Net cash provided by operating activities Cash flows from investing activities Purchases of property and equipment Purchases of marketable securities Maturities of marketable securities Sales of marketable securities Investments in non-marketable equity securities Acquisitions of business, net of cash acquired Change in restricted cash and deposits Net cash used in investing activities Cash flows from financing activities Net proceeds from issuance of convertible preferred stock. Net proceeds from issuance of commen stack Proceeds from exercise of stock options Proceeds from (repayments of) lang-term debt Proceeds from saie and lease-back transactions Principal payments on capital lease obligations: Excess tax benefit from share-based award activity Net cash provided by financing activities Nan-cash financing activities: Property and equip-nent acquired under capital leases Corrplefe the forleming table. answers. Round all percentages to fwo decinal places. information two-stage difcourfed cash foe model. I wir take my fer calculatigns en the foliewing equatian: Fef w Net Operating Profit After Taxes + Depreciation - Capital Expenditure - 8 in Net Operating Worhing Capieal two-stage discounted eash. fow model. 1 wil hese my BCF celculaton on the following Fuuation: FCr = Net Operating Prefit Affer Taxes + Deereciation - Capital Expenditure - A in Net Operating Warbing Casital Ams imsting semething 7.5% for Fatebook' stack: inwestors' requined rate of return, which wili Re (2) Hatr fingnol, Prasebosk he. Eocgle. Wiat vos pered to ko - Taxes Net operating profit after taxes (NOPAT) Operating current assets Operating current liabilities NowC Change in Nowe Net foved ansets (plant property 8 equipmant) Change in nat rixed assets + Depreciation and amorturation Capital expenditure Free cash fliaw Present value of FCH Honion value Present value of herizon vahie labilibes that FB reported in 2011nar stock in 2012, Thus. the value value, the derived equity value will be Willan, and the yalue of arefored atock m 2012mwi 1. Stock valuation - A comparison of estimated values and marketprices Slim Perkins, a business journalist, is a recent hire at his firm, Since he joined the firm, he has been following Facrbook inc.y (Fa) initial putic offering (IPO) and the stock's performance. His task is to estimate Facebook's fair market value, aiso referred to as "intrinsic" value, and campare this value with the current stock price, and recommend a buy, sell, or hold rating to investors, Silim puits the compury's censoldated financial ataterents to collect relevant data on the company's histerical financial performance. He notices that the company assumes a 45% marginal tax rate after the Ino, and mentions that the compary projects that user ratri and reveri growth will decline over time. Slim starts his evaluation by calculating ratios of costs and expenses to revenues. intereut expense to revenues, and ohers that mil form the set of assumptions in his analysis which will be used to calculate free cash fiows: Sowrce: Facebook loc, Prespectus. United States Seourites and Exchanpe Conmisson, 17 Mar 2012 . Web. 1 zane 2012 hetp://hww.sec-gov/Achlives/edgav/datav1326601/000119312512240111/62679540424be intmalec/ Complete the fowowing tabie. Cash flows from operating activities Net income Adjustments to reconcile net Depreciation and amortization Loss on write-off of assets Share-based compensation Other adjustments Changes in assets and liabilities: Accounts recelvable : (2011(inmilions)2010(inmilions)2005 Prepaid expenses and other current assets Other assets Accounts payable: Platform partners payable Accrued expenses and other current liabilities Deferred revenues and deposits Other liabilities Net cash provided by operating activities Cash flows from investing activities Purchases of property and equipment Purchases of marketable securities Other liabilities Net cash provided by operating activities Cash flows from investing activities Purchases of property and equipment Purchases of marketable securities Maturities of marketable securities Sales of marketable securities Investments in non-marketable equity securities Acquisitions of business, net of cash acquired Change in restricted cash and deposits Net cash used in investing activities Cash flows from financing activities Net proceeds from issuance of convertible preferred stock. Net proceeds from issuance of commen stack Proceeds from exercise of stock options Proceeds from (repayments of) lang-term debt Proceeds from saie and lease-back transactions Principal payments on capital lease obligations: Excess tax benefit from share-based award activity Net cash provided by financing activities Nan-cash financing activities: Property and equip-nent acquired under capital leases Corrplefe the forleming table. answers. Round all percentages to fwo decinal places. information two-stage difcourfed cash foe model. I wir take my fer calculatigns en the foliewing equatian: Fef w Net Operating Profit After Taxes + Depreciation - Capital Expenditure - 8 in Net Operating Worhing Capieal two-stage discounted eash. fow model. 1 wil hese my BCF celculaton on the following Fuuation: FCr = Net Operating Prefit Affer Taxes + Deereciation - Capital Expenditure - A in Net Operating Warbing Casital Ams imsting semething 7.5% for Fatebook' stack: inwestors' requined rate of return, which wili Re (2) Hatr fingnol, Prasebosk he. Eocgle. Wiat vos pered to ko - Taxes Net operating profit after taxes (NOPAT) Operating current assets Operating current liabilities NowC Change in Nowe Net foved ansets (plant property 8 equipmant) Change in nat rixed assets + Depreciation and amorturation Capital expenditure Free cash fliaw Present value of FCH Honion value Present value of herizon vahie labilibes that FB reported in 2011nar stock in 2012, Thus. the value value, the derived equity value will be Willan, and the yalue of arefored atock m 2012mwi
