2. Company Valuation Fley Airline Supply is trading at $15/share but you think that price may not be right. You have the following data and you want to use it to calculate its share price: Gross Sales COGS General & Admin Annual Sales Growth Rate Advertising, Promotion & Selling Yearly Inflation for non-COGS expenses Tax Rate Discount Rate Cash Balance Debt Share ols $124M 54% of sales $3.5M 3.0% $5M 3.3% 21% 8% $3M $5M $44M Cash Flow Adjustment Working Capital Capital Expenditures Year 1 2.0 (2.0) Year 2 (2.0) (2.0) Year 3 (1.2) (3.0) Year 4 (0.3) (4.0) Year 5 (1.0) (4.0) Year 6 (2.0) (4.0) Calculate the per share price and run sensitivities for growth rates of 3.0%, 3.5%, and 4% as well as discount rates of 8%, 9%, and 10%. Put these in a matrix. J K 5 6 A B C D E F G H 1 Fley Airline Supply Valuation 2 Yrs. 1-6 3 Sales growth Cash Flows 4 Costs (% of sales): 1 2 3 4 5 Cost of Goods Sold Sales 6 Advert., Prom., & Selling Cost of Goods Sold 7 General & Administrative Advert., Prom., & Selling 8 Rates: General & Administrative 9 Tax Net Income before Tax 10 Discount Taxes 11 Inflation Net Income after Tax 12 Results Cash flow adjustments: 13 PV of NCF (incl. TV) Working Capital 14 + Cash Capital Expenditures 15 - Debt Net Cash Flows 16 Total Equity (MS) NCF (incl. terminal value) 17 - # of shares outstanding (M) 18 - Price/share (S) Growth rate 19 Price/share (S) for: 3.0% 3.5% 4.0% 20 8.0% Disc. 21 9.0% Rate 22 10.0% TV 2. Company Valuation Fley Airline Supply is trading at $15/share but you think that price may not be right. You have the following data and you want to use it to calculate its share price: Gross Sales COGS General & Admin Annual Sales Growth Rate Advertising, Promotion & Selling Yearly Inflation for non-COGS expenses Tax Rate Discount Rate Cash Balance Debt Share ols $124M 54% of sales $3.5M 3.0% $5M 3.3% 21% 8% $3M $5M $44M Cash Flow Adjustment Working Capital Capital Expenditures Year 1 2.0 (2.0) Year 2 (2.0) (2.0) Year 3 (1.2) (3.0) Year 4 (0.3) (4.0) Year 5 (1.0) (4.0) Year 6 (2.0) (4.0) Calculate the per share price and run sensitivities for growth rates of 3.0%, 3.5%, and 4% as well as discount rates of 8%, 9%, and 10%. Put these in a matrix. J K 5 6 A B C D E F G H 1 Fley Airline Supply Valuation 2 Yrs. 1-6 3 Sales growth Cash Flows 4 Costs (% of sales): 1 2 3 4 5 Cost of Goods Sold Sales 6 Advert., Prom., & Selling Cost of Goods Sold 7 General & Administrative Advert., Prom., & Selling 8 Rates: General & Administrative 9 Tax Net Income before Tax 10 Discount Taxes 11 Inflation Net Income after Tax 12 Results Cash flow adjustments: 13 PV of NCF (incl. TV) Working Capital 14 + Cash Capital Expenditures 15 - Debt Net Cash Flows 16 Total Equity (MS) NCF (incl. terminal value) 17 - # of shares outstanding (M) 18 - Price/share (S) Growth rate 19 Price/share (S) for: 3.0% 3.5% 4.0% 20 8.0% Disc. 21 9.0% Rate 22 10.0% TV
