Question
a) Consider recent financials for Ellie's Essentials LLC: Balance Sheet 2020 2019 Current Assets $11,155.00 $10,000.00 Net PPE $31,000.00 $30,000.00 Total Assets $42,155.00 $40,000.00 Current
a)
Consider recent financials for Ellie's Essentials LLC:
Balance Sheet
| 2020 | 2019 | |
|---|---|---|
| Current Assets | $11,155.00 | $10,000.00 |
| Net PPE | $31,000.00 | $30,000.00 |
| Total Assets | $42,155.00 | $40,000.00 |
| Current Liabilities | $8,999.00 | $8,000.00 |
| Long-term debt | $13,569.00 | $12,000.00 |
| Total Liabilities | $22,568.00 | $20,000.00 |
| Shareholder Equity | $19,587.00 | $20,000.00 |
| Liabilities and Equity | $42,155.00 | $40,000.00 |
| Income Statement | 2020 | 2019 |
|---|---|---|
| SALES | $11,000.00 | $10,000.00 |
| COGS | $4,400.00 | $4,000.00 |
| GROSS PROFIT | $6,600.00 | $6,000.00 |
| S&A | $1,100.00 | $1,000.00 |
| Depreciation | $550.00 | $500.00 |
| EBIT | $4,950.00 | $4,500.00 |
| INTEREST | $1,272.00 | $1,200.00 |
| EBT | $3,678.00 | $3,300.00 |
| TAXES (37.00%) | $1,360.86 | $1,221.00 |
| NET INCOME | $2,317.14 | $2,079.00 |
Going forward, analysts have forecasted the following free cash flows: $2,500.00 in 2021, and $2,600.00 in 2022. After that point, analysts expect free cash flows to grow at 4.00%. The firm has no short-term debt or preferred stock, and there are 1,000 shares outstanding. The firm's cost of capital is 9.00%.
Find the free cash flow for the firm in 2020.
b)
Consider recent financials for Ellie's Essentials LLC:
Balance Sheet
| 2020 | 2019 | |
|---|---|---|
| Current Assets | $11,352.00 | $10,000.00 |
| Net PPE | $31,000.00 | $30,000.00 |
| Total Assets | $42,352.00 | $40,000.00 |
| Current Liabilities | $8,437.00 | $8,000.00 |
| Long-term debt | $13,434.00 | $12,000.00 |
| Total Liabilities | $21,871.00 | $20,000.00 |
| Shareholder Equity | $20,481.00 | $20,000.00 |
| Liabilities and Equity | $42,352.00 | $40,000.00 |
| Income Statement | 2020 | 2019 |
|---|---|---|
| SALES | $11,000.00 | $10,000.00 |
| COGS | $4,400.00 | $4,000.00 |
| GROSS PROFIT | $6,600.00 | $6,000.00 |
| S&A | $1,100.00 | $1,000.00 |
| Depreciation | $550.00 | $500.00 |
| EBIT | $4,950.00 | $4,500.00 |
| INTEREST | $1,272.00 | $1,200.00 |
| EBT | $3,678.00 | $3,300.00 |
| TAXES (39.00%) | $1,434.42 | $1,287.00 |
| NET INCOME | $2,243.58 | $2,013.00 |
Going forward, analysts have forecasted the following free cash flows: $2,600.00 in 2021, and $2,600.00 in 2022. After that point, analysts expect free cash flows to grow at 5.00%. The firm has no short-term debt or preferred stock, and there are 1,000 shares outstanding. The firm's cost of capital is 11.00%.
Estimate the firms price per share using the discounted cash flow model.
c)
Consider recent financials for Ellie's Essentials LLC:
Balance Sheet
| 2020 | 2019 | |
|---|---|---|
| Current Assets | $11,074.00 | $10,000.00 |
| Net PPE | $31,000.00 | $30,000.00 |
| Total Assets | $42,074.00 | $40,000.00 |
| Current Liabilities | $8,626.00 | $8,000.00 |
| Long-term debt | $13,387.00 | $12,000.00 |
| Total Liabilities | $22,013.00 | $20,000.00 |
| Shareholder Equity | $20,061.00 | $20,000.00 |
| Liabilities and Equity | $42,074.00 | $40,000.00 |
| Income Statement | 2020 | 2019 |
|---|---|---|
| SALES | $11,000.00 | $10,000.00 |
| COGS | $4,400.00 | $4,000.00 |
| GROSS PROFIT | $6,600.00 | $6,000.00 |
| S&A | $1,100.00 | $1,000.00 |
| Depreciation | $550.00 | $500.00 |
| EBIT | $4,950.00 | $4,500.00 |
| INTEREST | $1,272.00 | $1,200.00 |
| EBT | $3,678.00 | $3,300.00 |
| TAXES (38.00%) | $1,397.64 | $1,254.00 |
| NET INCOME | $2,280.36 | $2,046.00 |
Going forward, analysts have forecasted the following free cash flows: $2,500.00 in 2021, and $2,600.00 in 2022. After that point, analysts expect free cash flows to grow at 3.00%. The firm has no short-term debt or preferred stock, and there are 1,000 shares outstanding. The firm's cost of capital is 12.00%.
You are trying to estimate the value of Doc McRuffins Incorporated. It is a rival firm to Ellie's Essentials, but not publicly traded. You do know that Doc McRuffins has an EBITDA of $4,750 for 2020. Using multiples, what is a rough estimate for the enterprise value of Doc McRuffins
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Advanced Finance
Authors: Michael Fardon
1st Edition
1872962319, 1872962173, 978-1872962313, 978-1872962177
