. 
9. Calculate the Free Cashflow to the Equity for XYZ? If the company expected to grow FCFE by 3% and had cost of capital of 10%, what price per share is the company valued at? (Hint: Use Cashflow from Investing as CAPEX. Another hint: Value the company using constant growth formula using Free Cashflow to Equity, then divide by the shares outstanding to get the FCFE value per share). 10. Based on 1-9, Would you buy XYZ firm? Would you buy the competitor firm? Why or Why not? Use specific answers from 1-9 to explain your reason. Which stock would be considered the value investment and which stock would be considered the growth investment? Why or Why not? XYZ, Inc. Income Statement (all data in Millions) Year 2016 2017 2018 Revenue 39,807.00 40,122.00 42,294.00 Cost of Goods Sold 14.030.00 12,912.00 13,509.00 Gross Profit 25,777.00 27,210.00 28,785.00 Selling. General, & Admin. Expense 10,017.00 10,074.00 10,102.00 Research & Development 10,261.00 10.339.00 9,752.00 Other Operating Expense 0 0 o Total Operating Expense 20.278.00 20,413.00 19,854.00 Operating Income 5,499.00 6.797.00 8,931.00 Interest Income 328 385 343 Interest Expense -693 -754 -772 Net Interest Income -365 -369 -4291 Other Income (Expense) -475 93 1991 Pre-Tax Income 4.659.00 6.521.00 8,701.00 Tax Provision -718 -4,103.00 -2.508.00 Tax Rate % 15.41 62.92 28.82 Net Income (Continuing Operations) 3.941.00 2.418.00 6,193.00 Net Income (Discontinued Operations) 0 0 0 Other Income (Minority Interest) -21 -24 27 Net Income 3,920.00 2,394.00 6,220.00 2019 46,840.00 14,112.00 32,728.00 10,615.00 9,872.00 0 20,487.00 12,241.00 274 -893 -619) - 158 11.464.00 -1.687.00 14.72 9.777.00 0 66 9,843.00 shares Outstanding 2,679.00 2,580.00 2,787.00 2,748.00 Balance Sheet (all data in Millions) 2016 6.515.00 Year Cash And Cash Equivalents 2017 6,092.00 2018 7.965.00 2019 9,676.00 12 BA A EEEEE 7,826.00 14,341.00 7,018.00 0 0 899 8.864.00 7.071.00 774 10,450.00 6.778.00 2,406.00 8,499.00 6.873.00 0 o o 6.873.00 o 7.018.00 100080 7.071.00 otolo 18 tolon 6.778.00 o 0 o 0 o o o o 0 O 5.440.00 5,440.00 Marketable Securities Cash, Cash Equivalents, Marketable Securities Accounts Receivable Notes Receivable Loans Receivable Other Current Receivables Total Receivables Inventories, Raw Materials & Components Inventories, Work In Process Inventories, Inventories Adjustments Triventories, Finished Goods Inventories, Other Total Inventories Other Current Assets Total Current Assets Investments And Advances Land And Improvements Buildings And Improvements Machinery, Furniture, Equipment Construction In Progress Other Gross PPE Gross Property. Plant and Equipment Accumulated Depreciation Property. Plant and Equipment Intangible Assets Goodwill Other Long Term Assets Total Long-Term Assets Total Assets Accounts Payable Total Tax Payable Other Current Payables Current Accrued Expense Accounts Payable & Accrued Expense Short-Term Debt Short-Term Capital Lease Obligation Short-Term Debt & Capital Lease Obligation Current Deferred Reven 5.978.00 5.979.00 4,277.00 27.483.00 1.469.00 343 11.989.00 15.394.00 5,013.00 o 0 0 4,866.00 5,096.00 4.866.00 5.096.00 4.389.00 4.299.00 30,614.00 24.766.00 11.416.00 12.125.00 412 365 11,439.00 11.726.00 14.033.00 14,649.00 1,871.00 2.301.00 0 o 27.775.00 29,041.00 - 15,749.00 -16,602.00 12.02600 12,439.00 35,46350 32.467.00 18.162.00 18.284.00 5,854.00 6,073.00 64,763.00 63.106.00 95.377.00 87,872.00 2.807.00 3,102.00 2.239.00 708 1.316.00 1.320.00 10.274.00 10,427.00 16.636.00 15.557.00 568 3.057.00 0 0 568 3,057.00 4,500.00 25,875.00 6.233.00 333 11,486.00 14,441.00 3,355.00 o 29,615.00 - 16,324.00 13.291.00 31.337.00 19.253.00 5,881.00 56,762.00 82,637.00 32,739.00 - 17.686.00 15.033.00 33.621.00 19,425.00 6.771.00 56,914.00 84,397.00 3.738.00 736 1.587.00 12.549.00 19.610.00 3.610.00 O 3,318.00 1,971.00 1,458.00 10.151.00 16,898.00 5,308.00 o 5,308.00 3.610.00 22.220.00 22.736.00 0 Total Current Liabilities Long-Term Debt Long-Term Capital Lease Obligation Long-Term Debt & Capital Lease Obligation Pension AndRetirementBenefit NonCurrent Deferred Liabilities Other Long-Term Liabilities Total Long-Term Liabilities Total Liabilities Common Stock Preferred Stock Retained Earnings Accumulated other comprehensive income (loss) Additional Paid In Capital Treasury Stock Other Stockholders Equity Total Stockholders Equity Minority interest Total Equity 17,204.00 18,614.00 22,206.00 24.274.00 21.333.00 19.806.00 0 0 0 24.274.00 21.333.00 19.806.00 0 0 0 5,077.00 2.219.00 1.702.00 8.514.00 11.117.00 12.041.00 37.865,00 34.689.00 33,549.00 55,069.00 53,303.00 55.755.00 1.798.00 1.788.00 1,788.00 0 0 0 44,133.00 41.350.00 42.579.00 -5.226.00 -4.910.00 -5,545.00 39.939.00 39.902.00 38,808.00 -40.546.00 -43.794.00 -50.929.00 0 0 0 40,088.00 34 336.00 26.701.00 220 233 181 40.308.00 34.569.00 26.892.00 22,736.00 0 1.470.00 11,970.00 36.176.00 58.396.00 1.788.00 0 46,602.00 -6.193.00 39.660.00 -35.950.00 0 25.907.00 94 26.001.00 Statement of Cashflow (all data in Millions) Year 2016 2017 Net Income From Continuing Operations 3.941.00 2.418.00 Depreciation, Depletion and Amortization 3.471.00 4.676.00 Change In Receivables -619 297 Change in Inventory 206 -145 Change in Prepaid Assets 0 0 Change In Payables And Accrued Expense -1.616.00 -3.959.00 Change In Other Working Capital -572 -1.210.00 Change in Working Capital -2.601.00 -5.017.00 Deferred Tax - 1.521.00 -2.621.00 Stock Based Compensation 300 312 Asset Impairment Charge 3.948.00 646 Cash from Discontinued Operating Activities 0 0 Cash Flow from Others 838 6,037.00 Cash Flow from Operations 10.376.00 6,451.00 Purchase of Property, plant, Equipment -1,614.00 -1.888.00 Sale of Property, plant, Equipment 0 0 Purchase of Business -780 -396 Sale of Business 0 0 2018 2019 6.193.00 9.777.00 4.519.00 3.632.00 -418 294 -911 -50B 0 716 - 1.584.00 -940 -209 - 1.353.00 -2.067.00 -509 -356 348 417 296 1,040.00 0 1.628.00 1,177.00 10,922.00 13,440.00 -2.615.00 -3,473.00 -4,954.00 -431 0 -7,994.00 -15,651.00 14.353.00 -10,739.00 15,664.00 15,252.00 -3.202.00 8.622.00 0 0 0 0 0 ol 0 482 0 38 2,679.00 102 4,314.00 378 -2,629.00 Purchase of Investment Sale Of Investment Net Intangibles Purchase And Sale Cash From Discontinued Investing Activities Cash From Other Investing Activities Cash Flow from Investing Issuance of Stock Repurchase of Stock Net Issuance of Preferred Stock Net Issuance of Debt Cash Flow for Dividends Other Financing Cash Flow from Financing 0 0 -9,091.00 Oll -4.014.00 0 -3,210.00 0 -3,434.00 0 -1.307.00 -5,124.00 8211 -4.780.00 0 837 -1,129.00 -5.167.00 -5,172.00 1,248.00 -5,695.00 366 304 266 -9,044.00 -10,006.00 -13, 160.00 -8,861.00 9. Calculate the Free Cashflow to the Equity for XYZ? If the company expected to grow FCFE by 3% and had cost of capital of 10%, what price per share is the company valued at? (Hint: Use Cashflow from Investing as CAPEX. Another hint: Value the company using constant growth formula using Free Cashflow to Equity, then divide by the shares outstanding to get the FCFE value per share). 10. Based on 1-9, Would you buy XYZ firm? Would you buy the competitor firm? Why or Why not? Use specific answers from 1-9 to explain your reason. Which stock would be considered the value investment and which stock would be considered the growth investment? Why or Why not? XYZ, Inc. Income Statement (all data in Millions) Year 2016 2017 2018 Revenue 39,807.00 40,122.00 42,294.00 Cost of Goods Sold 14.030.00 12,912.00 13,509.00 Gross Profit 25,777.00 27,210.00 28,785.00 Selling. General, & Admin. Expense 10,017.00 10,074.00 10,102.00 Research & Development 10,261.00 10.339.00 9,752.00 Other Operating Expense 0 0 o Total Operating Expense 20.278.00 20,413.00 19,854.00 Operating Income 5,499.00 6.797.00 8,931.00 Interest Income 328 385 343 Interest Expense -693 -754 -772 Net Interest Income -365 -369 -4291 Other Income (Expense) -475 93 1991 Pre-Tax Income 4.659.00 6.521.00 8,701.00 Tax Provision -718 -4,103.00 -2.508.00 Tax Rate % 15.41 62.92 28.82 Net Income (Continuing Operations) 3.941.00 2.418.00 6,193.00 Net Income (Discontinued Operations) 0 0 0 Other Income (Minority Interest) -21 -24 27 Net Income 3,920.00 2,394.00 6,220.00 2019 46,840.00 14,112.00 32,728.00 10,615.00 9,872.00 0 20,487.00 12,241.00 274 -893 -619) - 158 11.464.00 -1.687.00 14.72 9.777.00 0 66 9,843.00 shares Outstanding 2,679.00 2,580.00 2,787.00 2,748.00 Balance Sheet (all data in Millions) 2016 6.515.00 Year Cash And Cash Equivalents 2017 6,092.00 2018 7.965.00 2019 9,676.00 12 BA A EEEEE 7,826.00 14,341.00 7,018.00 0 0 899 8.864.00 7.071.00 774 10,450.00 6.778.00 2,406.00 8,499.00 6.873.00 0 o o 6.873.00 o 7.018.00 100080 7.071.00 otolo 18 tolon 6.778.00 o 0 o 0 o o o o 0 O 5.440.00 5,440.00 Marketable Securities Cash, Cash Equivalents, Marketable Securities Accounts Receivable Notes Receivable Loans Receivable Other Current Receivables Total Receivables Inventories, Raw Materials & Components Inventories, Work In Process Inventories, Inventories Adjustments Triventories, Finished Goods Inventories, Other Total Inventories Other Current Assets Total Current Assets Investments And Advances Land And Improvements Buildings And Improvements Machinery, Furniture, Equipment Construction In Progress Other Gross PPE Gross Property. Plant and Equipment Accumulated Depreciation Property. Plant and Equipment Intangible Assets Goodwill Other Long Term Assets Total Long-Term Assets Total Assets Accounts Payable Total Tax Payable Other Current Payables Current Accrued Expense Accounts Payable & Accrued Expense Short-Term Debt Short-Term Capital Lease Obligation Short-Term Debt & Capital Lease Obligation Current Deferred Reven 5.978.00 5.979.00 4,277.00 27.483.00 1.469.00 343 11.989.00 15.394.00 5,013.00 o 0 0 4,866.00 5,096.00 4.866.00 5.096.00 4.389.00 4.299.00 30,614.00 24.766.00 11.416.00 12.125.00 412 365 11,439.00 11.726.00 14.033.00 14,649.00 1,871.00 2.301.00 0 o 27.775.00 29,041.00 - 15,749.00 -16,602.00 12.02600 12,439.00 35,46350 32.467.00 18.162.00 18.284.00 5,854.00 6,073.00 64,763.00 63.106.00 95.377.00 87,872.00 2.807.00 3,102.00 2.239.00 708 1.316.00 1.320.00 10.274.00 10,427.00 16.636.00 15.557.00 568 3.057.00 0 0 568 3,057.00 4,500.00 25,875.00 6.233.00 333 11,486.00 14,441.00 3,355.00 o 29,615.00 - 16,324.00 13.291.00 31.337.00 19.253.00 5,881.00 56,762.00 82,637.00 32,739.00 - 17.686.00 15.033.00 33.621.00 19,425.00 6.771.00 56,914.00 84,397.00 3.738.00 736 1.587.00 12.549.00 19.610.00 3.610.00 O 3,318.00 1,971.00 1,458.00 10.151.00 16,898.00 5,308.00 o 5,308.00 3.610.00 22.220.00 22.736.00 0 Total Current Liabilities Long-Term Debt Long-Term Capital Lease Obligation Long-Term Debt & Capital Lease Obligation Pension AndRetirementBenefit NonCurrent Deferred Liabilities Other Long-Term Liabilities Total Long-Term Liabilities Total Liabilities Common Stock Preferred Stock Retained Earnings Accumulated other comprehensive income (loss) Additional Paid In Capital Treasury Stock Other Stockholders Equity Total Stockholders Equity Minority interest Total Equity 17,204.00 18,614.00 22,206.00 24.274.00 21.333.00 19.806.00 0 0 0 24.274.00 21.333.00 19.806.00 0 0 0 5,077.00 2.219.00 1.702.00 8.514.00 11.117.00 12.041.00 37.865,00 34.689.00 33,549.00 55,069.00 53,303.00 55.755.00 1.798.00 1.788.00 1,788.00 0 0 0 44,133.00 41.350.00 42.579.00 -5.226.00 -4.910.00 -5,545.00 39.939.00 39.902.00 38,808.00 -40.546.00 -43.794.00 -50.929.00 0 0 0 40,088.00 34 336.00 26.701.00 220 233 181 40.308.00 34.569.00 26.892.00 22,736.00 0 1.470.00 11,970.00 36.176.00 58.396.00 1.788.00 0 46,602.00 -6.193.00 39.660.00 -35.950.00 0 25.907.00 94 26.001.00 Statement of Cashflow (all data in Millions) Year 2016 2017 Net Income From Continuing Operations 3.941.00 2.418.00 Depreciation, Depletion and Amortization 3.471.00 4.676.00 Change In Receivables -619 297 Change in Inventory 206 -145 Change in Prepaid Assets 0 0 Change In Payables And Accrued Expense -1.616.00 -3.959.00 Change In Other Working Capital -572 -1.210.00 Change in Working Capital -2.601.00 -5.017.00 Deferred Tax - 1.521.00 -2.621.00 Stock Based Compensation 300 312 Asset Impairment Charge 3.948.00 646 Cash from Discontinued Operating Activities 0 0 Cash Flow from Others 838 6,037.00 Cash Flow from Operations 10.376.00 6,451.00 Purchase of Property, plant, Equipment -1,614.00 -1.888.00 Sale of Property, plant, Equipment 0 0 Purchase of Business -780 -396 Sale of Business 0 0 2018 2019 6.193.00 9.777.00 4.519.00 3.632.00 -418 294 -911 -50B 0 716 - 1.584.00 -940 -209 - 1.353.00 -2.067.00 -509 -356 348 417 296 1,040.00 0 1.628.00 1,177.00 10,922.00 13,440.00 -2.615.00 -3,473.00 -4,954.00 -431 0 -7,994.00 -15,651.00 14.353.00 -10,739.00 15,664.00 15,252.00 -3.202.00 8.622.00 0 0 0 0 0 ol 0 482 0 38 2,679.00 102 4,314.00 378 -2,629.00 Purchase of Investment Sale Of Investment Net Intangibles Purchase And Sale Cash From Discontinued Investing Activities Cash From Other Investing Activities Cash Flow from Investing Issuance of Stock Repurchase of Stock Net Issuance of Preferred Stock Net Issuance of Debt Cash Flow for Dividends Other Financing Cash Flow from Financing 0 0 -9,091.00 Oll -4.014.00 0 -3,210.00 0 -3,434.00 0 -1.307.00 -5,124.00 8211 -4.780.00 0 837 -1,129.00 -5.167.00 -5,172.00 1,248.00 -5,695.00 366 304 266 -9,044.00 -10,006.00 -13, 160.00 -8,861.00
