In order to value CINTAS company, please forecast its future free cash flows. Explain how this task is approached. Use downloaded real data with citations, try to make the forecast and list issues arising from it.

The free cash flow of Cintas between the years 2016 and 2019 were as shown above, the company's free cash flows were positive over the 4 year period. Additionally, the B C D E F H Based on historical financial data, find FCF for the company of your choice. 2 3 1 In week 1 you were asked to choose a publicly traded company and submit its name for instructor's approval Assuming 4 2. Download annual financial data for the last 5 years from Edgar Website (forms 10-K). Attention if your company became public less 5 than 5 years ago, you will also have to download data from its IPO filing prospectus (form 424B4). Template below is approximate, you 6 may modify it (change, delete, or add rows), to suit your company 7 3. Using approach similar to the one described in this modules Excel file you will have to calculate the FCF for the company of your 8 choice 9 If you have difficulty estimating company's tax rate you may assume statutory tax rate of 35% for years before 2018 10 For submission, Excel file is enough 11 12. 13 14 Financial Data 15 16 USD in millions except per share data. Year 1 Year 2 Year 3 Year 4 Year 5 17 Assets 18 Cash and cash equivalents $417 $130 $169 $139 597 19 Short-term investments $16 $70 $22 20 Receivables $496 S563 $736 $805 $910 21 Inventories $226 $249 S278 $280 $335 22 Prepaid expenses S24 $26 $30 $32 $103 23 Other current assets $542 $719 $722 $792 24 Total current assets $1,736 $1,590 $1,954 $1,978 $2.236 25 Non-current assets 26 Property, plant and equipment 27 Gross property, plant and equipment $2,194 $2.414 $2.840 $3.046 $3,192 28 Accumulated Depreciation (51,323) ($1.419) ($1,516) ($1,664) (51,762) $871 $994 $1,324 $1,383 29 Net property, plant and equipment $1,431 $330 $125 $165 $176 $192 30 Equity and other investments $1,196 $1,292 $2.782 $2,847 31 Goodwill $2.842 $588 $76 $44 5735 $575 32 Intangible assets Close MFS to FCF Template $556 ENTRAL FLORIDA EMP. FO... Financial Data Year 1 Year 2 Year 3 Year 4 Year 5 $139 $97 $417 $16 $496 $226 $24 $556 $1,736 $139 $70 $563 $249 $26 $542 $1,590 $169 $22 $736 $278 $30 $719 $1.954 $805 $280 $32 $722 $1,978 $910 $335 $103 $792 $2.236 15 16 USD in millions except per share data 17 Assets 18 Cash and cash equivalents 19 Short-term investments 20 Receivables 21 Inventories 22 Prepaid expenses 23 Other current assets 24 Total current assets 25 Non-current assets 26 Property, plant and equipment 27 Gross property, plant and equipment 28 Accumulated Depreciation 29 Net property, plant and equipment 30 Equity and other investments 31 Goodwill 32 Intangible assets 33 Other long-term assets 34 Total non-current assets 35 Total assets 36 37 Liabilities 38 Current liabilities 39 Short-term debt 40 Accounts payable 41 Deferred income taxes 42 Taxes payable 43 Accrued liabilities Close 44 Other current liabilities FS to FCF Template $2.194 ($1,323) $871 $330 $1,196 $44 $16 $2.457 $4,192 $2,414 ($1,419) $994 $125 $1.292 $76 $28 $2,514 $4.104 $2,840 ($1.516) $1,324 $165 $2.782 $588 $30 $4,890 $6,844 $3,046 ($1,664) $1,383 $176 $2,847 $575 $3.192 ($1,762) $1,431 $192 $2.842 $735 $4.980 56,958 $5200 $7,437 $250 S115 $363 $177 $312 $226 $215 $110 $112 $6 $235 $158 $6 $268 $178 $8 $312 $271 $8 $299 $253 $8 $302 $29 SCL 635- CENTRAL FLORIDA EMP. FOR The free cash flow of Cintas between the years 2016 and 2019 were as shown above, the company's free cash flows were positive over the 4 year period. Additionally, the B C D F 36 G H 37 Liabilities 38 Current liabilities 39 Short-term debt $250 $363 40 Accounts payable $312 $110 $115 $177 $215 41 Deferred income taxes $226 $112 42 Taxes payable $6 $6 S8 $8 $8 43 Accrued liabilities $235 $268 $312 $299 $302 44 Other current liabilities $158 $178 $271 $253 $279 45 Total current liabilities $621 $816 $1,131 $776 $1,128 46 Non-current liabilities 47 Long-term debt $1,300 $1,050 $2,771 $2,535 $2,538 48 Deferred taxes habilities $227 $259 $469 $353 $438 49 Accrued liabilities $112 $137 $170 $278 $331 50 Total non-current liabilities $1.639 $1,446 $3,410 $3,166 $3,306 51 Total liabilities $2.260 $2,262 $4,541 $3.942 $4,434 52 Stockholders' equity 53 Common stock $329 S410 S485 $618 $840 54 Additional paid-in capital $157 $205 $224 $245 $228 Retained earnings 55 S4,228 $4,806 $5,171 S5,838 $6,691 ($3,553) (52.773) (S3,701) ($3.574) 56 Treasury stock ($4.718) (58) (S25) (53) $16 (539) 57 Accumulated other comprehensive income $1,932 $1,843 $2,303 $3,017 $3,003 58 Total stockholders' equity $6,844 $4,192 S6,958 $4,104 59 $7,437 Total liabilities and stockholders' equity 60 61 Year 1 Year 2 Year 3 Year 4 Year 5 62 Income Statement (USD in millions except per share data) $4,477 $4,905 $5,323 $6,477 $6,892 63 Revenue $2.556 $2.776 $2.943 $3,568 $3.764 64 Cost of revenue $1,921 $2.130 $2,380 $2.909 $3.129 65 Gross profit 66 Operating expenses $1,225 51.981 $1,527 $1,348 S1 917 Close 67 Sales, General and administrative WLIUS shown above, the company's free cash flows were positive over the 4 year period. Additionally, the D E F G Year 1 $4,477 $2,556 $1,921 Year 2 $4,905 $2,776 $2.130 Year 3 $5,323 $2,943 $2,380 Year 4 $6,477 $3,568 $2.909 Year 5 $6,892 $3,764 $3,129 $1,225 $155 $1,348 $165 B 60 61 62 Income Statement (USD in millions except per share data) 63 Revenue 64 Cost of revenue 65 Gross profit 66 Operating expenses 67 Sales, General and administrative 68 Depreciation and Armotization 69 Restructuring, merger and acquisition 70 Other operating expenses 71 Total operating expenses 72 Operating income 73 Interest Expense 74 Other income (expense) 75 Income before taxes 76 Provision for income taxes 77 Other income 78 Net income from continuing operations 79 Net income from discontinuing ops 80 Net income 81 Preferred dividend 82 Net income available to common shareholders 83 Earnings per share 84 Basic 85 Diluted 86 Weighted average shares outstanding 87 Basic 88 Diluted 89 90 91 Find Changes in NWC $1,225 $696 $65 $27 $658 S245 (56) $408 $23 $431 $1,348 $782 $65 $1 $718 S261 $1,527 $197 $79 ($79) $1,527 $853 $87 ($79) $687 S230 $1,917 $279 $42 (542) $1,917 $992 $110 (541) $841 S57 $1,981 $360 $14 (514) $1,981 $1,148 $102 $56 $1,102 $220 $784 $457 $237 S694 $7 S686 $457 $23 S481 $59 S843 S883 $2 5885 $10 $875 $431 $481 $843 $4 $4 S6 $6 $4 54 $8 $8 $8 S8 $116 $118 S108 $110 $105 $108 S107 $110 $106 $100 The free cash Tow of Lintas between the years 2016 and 2019 were as shown above, the company's free cash flows were positive over the 4 year period. Additionally, the B D E F 91 Find Changes in NWC G H 92 Year 1 Year 2 Year 3 Year 4 93 Current Assets, other than Cash and Marketable Securities Year 5 $1,319 $1,451 $1,785 $1,839 04 Current Liabilities, excluding Debt $2,139 $621 $566 $768 $776 $816 95 Net Working Capital (CA-CL) $698 5885 $1,017 $1,063 96 $1,323 97 Change in NWC (NWC Investment) $187 $132 $46 $260 98 99 Find Capex 100 Year 1 Year 2 Year 3 Year 4 Year 5 101 Net Property. Plant & Equipment $871 $994 $1,324 $1 383 $1.431 102 Depreciation and amortization $155 $165 $197 $279 $360 103 Capex $133 $362 $141 $129 104 You can read more using the following link Howard Keen, Clearing Up Confusion over calculation of FCF 105 106 Estimate FCF 107 If you have difficulty estimating company's tax rate 108 Tax Rate 35% you may assume statutory tax rate of 35% before 2018 and 21% thereafter 109 21% 110 Year Year 1 111 Year 2 Year 3 Year 4 Year 5 $782 $853 $992 112 EBIT $1,148 S508 $554 $645 $907 113 EBIT(1-T) = NOPAT $165 S197 $279 $360 114 Plus: Depreciation Expense $133 $362 $141 $129 115 Less: CAPEX $187 $132 $46 $260 116 Less Working Capital Investment $353 S257 S737 S878 117 Firm Free Cash Flow (USD in millions) 118 119 120 The free cash flow of Cintas between the years 2016 and 2019 were as shown above, the company's free cash flows were positive over the 4 year period. Additionally, the trend analysis 121 flows shows that, overall, the company's free cash flows increased between 2016 and 2019. the increase is as a result of the increase in the company's earnings before mterest and taxes 122 Jose decrease m CAPEX FS to FCF Template The free cash flow of Cintas between the years 2016 and 2019 were as shown above, the company's free cash flows were positive over the 4 year period. Additionally, the B C D E F H Based on historical financial data, find FCF for the company of your choice. 2 3 1 In week 1 you were asked to choose a publicly traded company and submit its name for instructor's approval Assuming 4 2. Download annual financial data for the last 5 years from Edgar Website (forms 10-K). Attention if your company became public less 5 than 5 years ago, you will also have to download data from its IPO filing prospectus (form 424B4). Template below is approximate, you 6 may modify it (change, delete, or add rows), to suit your company 7 3. Using approach similar to the one described in this modules Excel file you will have to calculate the FCF for the company of your 8 choice 9 If you have difficulty estimating company's tax rate you may assume statutory tax rate of 35% for years before 2018 10 For submission, Excel file is enough 11 12. 13 14 Financial Data 15 16 USD in millions except per share data. Year 1 Year 2 Year 3 Year 4 Year 5 17 Assets 18 Cash and cash equivalents $417 $130 $169 $139 597 19 Short-term investments $16 $70 $22 20 Receivables $496 S563 $736 $805 $910 21 Inventories $226 $249 S278 $280 $335 22 Prepaid expenses S24 $26 $30 $32 $103 23 Other current assets $542 $719 $722 $792 24 Total current assets $1,736 $1,590 $1,954 $1,978 $2.236 25 Non-current assets 26 Property, plant and equipment 27 Gross property, plant and equipment $2,194 $2.414 $2.840 $3.046 $3,192 28 Accumulated Depreciation (51,323) ($1.419) ($1,516) ($1,664) (51,762) $871 $994 $1,324 $1,383 29 Net property, plant and equipment $1,431 $330 $125 $165 $176 $192 30 Equity and other investments $1,196 $1,292 $2.782 $2,847 31 Goodwill $2.842 $588 $76 $44 5735 $575 32 Intangible assets Close MFS to FCF Template $556 ENTRAL FLORIDA EMP. FO... Financial Data Year 1 Year 2 Year 3 Year 4 Year 5 $139 $97 $417 $16 $496 $226 $24 $556 $1,736 $139 $70 $563 $249 $26 $542 $1,590 $169 $22 $736 $278 $30 $719 $1.954 $805 $280 $32 $722 $1,978 $910 $335 $103 $792 $2.236 15 16 USD in millions except per share data 17 Assets 18 Cash and cash equivalents 19 Short-term investments 20 Receivables 21 Inventories 22 Prepaid expenses 23 Other current assets 24 Total current assets 25 Non-current assets 26 Property, plant and equipment 27 Gross property, plant and equipment 28 Accumulated Depreciation 29 Net property, plant and equipment 30 Equity and other investments 31 Goodwill 32 Intangible assets 33 Other long-term assets 34 Total non-current assets 35 Total assets 36 37 Liabilities 38 Current liabilities 39 Short-term debt 40 Accounts payable 41 Deferred income taxes 42 Taxes payable 43 Accrued liabilities Close 44 Other current liabilities FS to FCF Template $2.194 ($1,323) $871 $330 $1,196 $44 $16 $2.457 $4,192 $2,414 ($1,419) $994 $125 $1.292 $76 $28 $2,514 $4.104 $2,840 ($1.516) $1,324 $165 $2.782 $588 $30 $4,890 $6,844 $3,046 ($1,664) $1,383 $176 $2,847 $575 $3.192 ($1,762) $1,431 $192 $2.842 $735 $4.980 56,958 $5200 $7,437 $250 S115 $363 $177 $312 $226 $215 $110 $112 $6 $235 $158 $6 $268 $178 $8 $312 $271 $8 $299 $253 $8 $302 $29 SCL 635- CENTRAL FLORIDA EMP. FOR The free cash flow of Cintas between the years 2016 and 2019 were as shown above, the company's free cash flows were positive over the 4 year period. Additionally, the B C D F 36 G H 37 Liabilities 38 Current liabilities 39 Short-term debt $250 $363 40 Accounts payable $312 $110 $115 $177 $215 41 Deferred income taxes $226 $112 42 Taxes payable $6 $6 S8 $8 $8 43 Accrued liabilities $235 $268 $312 $299 $302 44 Other current liabilities $158 $178 $271 $253 $279 45 Total current liabilities $621 $816 $1,131 $776 $1,128 46 Non-current liabilities 47 Long-term debt $1,300 $1,050 $2,771 $2,535 $2,538 48 Deferred taxes habilities $227 $259 $469 $353 $438 49 Accrued liabilities $112 $137 $170 $278 $331 50 Total non-current liabilities $1.639 $1,446 $3,410 $3,166 $3,306 51 Total liabilities $2.260 $2,262 $4,541 $3.942 $4,434 52 Stockholders' equity 53 Common stock $329 S410 S485 $618 $840 54 Additional paid-in capital $157 $205 $224 $245 $228 Retained earnings 55 S4,228 $4,806 $5,171 S5,838 $6,691 ($3,553) (52.773) (S3,701) ($3.574) 56 Treasury stock ($4.718) (58) (S25) (53) $16 (539) 57 Accumulated other comprehensive income $1,932 $1,843 $2,303 $3,017 $3,003 58 Total stockholders' equity $6,844 $4,192 S6,958 $4,104 59 $7,437 Total liabilities and stockholders' equity 60 61 Year 1 Year 2 Year 3 Year 4 Year 5 62 Income Statement (USD in millions except per share data) $4,477 $4,905 $5,323 $6,477 $6,892 63 Revenue $2.556 $2.776 $2.943 $3,568 $3.764 64 Cost of revenue $1,921 $2.130 $2,380 $2.909 $3.129 65 Gross profit 66 Operating expenses $1,225 51.981 $1,527 $1,348 S1 917 Close 67 Sales, General and administrative WLIUS shown above, the company's free cash flows were positive over the 4 year period. Additionally, the D E F G Year 1 $4,477 $2,556 $1,921 Year 2 $4,905 $2,776 $2.130 Year 3 $5,323 $2,943 $2,380 Year 4 $6,477 $3,568 $2.909 Year 5 $6,892 $3,764 $3,129 $1,225 $155 $1,348 $165 B 60 61 62 Income Statement (USD in millions except per share data) 63 Revenue 64 Cost of revenue 65 Gross profit 66 Operating expenses 67 Sales, General and administrative 68 Depreciation and Armotization 69 Restructuring, merger and acquisition 70 Other operating expenses 71 Total operating expenses 72 Operating income 73 Interest Expense 74 Other income (expense) 75 Income before taxes 76 Provision for income taxes 77 Other income 78 Net income from continuing operations 79 Net income from discontinuing ops 80 Net income 81 Preferred dividend 82 Net income available to common shareholders 83 Earnings per share 84 Basic 85 Diluted 86 Weighted average shares outstanding 87 Basic 88 Diluted 89 90 91 Find Changes in NWC $1,225 $696 $65 $27 $658 S245 (56) $408 $23 $431 $1,348 $782 $65 $1 $718 S261 $1,527 $197 $79 ($79) $1,527 $853 $87 ($79) $687 S230 $1,917 $279 $42 (542) $1,917 $992 $110 (541) $841 S57 $1,981 $360 $14 (514) $1,981 $1,148 $102 $56 $1,102 $220 $784 $457 $237 S694 $7 S686 $457 $23 S481 $59 S843 S883 $2 5885 $10 $875 $431 $481 $843 $4 $4 S6 $6 $4 54 $8 $8 $8 S8 $116 $118 S108 $110 $105 $108 S107 $110 $106 $100 The free cash Tow of Lintas between the years 2016 and 2019 were as shown above, the company's free cash flows were positive over the 4 year period. Additionally, the B D E F 91 Find Changes in NWC G H 92 Year 1 Year 2 Year 3 Year 4 93 Current Assets, other than Cash and Marketable Securities Year 5 $1,319 $1,451 $1,785 $1,839 04 Current Liabilities, excluding Debt $2,139 $621 $566 $768 $776 $816 95 Net Working Capital (CA-CL) $698 5885 $1,017 $1,063 96 $1,323 97 Change in NWC (NWC Investment) $187 $132 $46 $260 98 99 Find Capex 100 Year 1 Year 2 Year 3 Year 4 Year 5 101 Net Property. Plant & Equipment $871 $994 $1,324 $1 383 $1.431 102 Depreciation and amortization $155 $165 $197 $279 $360 103 Capex $133 $362 $141 $129 104 You can read more using the following link Howard Keen, Clearing Up Confusion over calculation of FCF 105 106 Estimate FCF 107 If you have difficulty estimating company's tax rate 108 Tax Rate 35% you may assume statutory tax rate of 35% before 2018 and 21% thereafter 109 21% 110 Year Year 1 111 Year 2 Year 3 Year 4 Year 5 $782 $853 $992 112 EBIT $1,148 S508 $554 $645 $907 113 EBIT(1-T) = NOPAT $165 S197 $279 $360 114 Plus: Depreciation Expense $133 $362 $141 $129 115 Less: CAPEX $187 $132 $46 $260 116 Less Working Capital Investment $353 S257 S737 S878 117 Firm Free Cash Flow (USD in millions) 118 119 120 The free cash flow of Cintas between the years 2016 and 2019 were as shown above, the company's free cash flows were positive over the 4 year period. Additionally, the trend analysis 121 flows shows that, overall, the company's free cash flows increased between 2016 and 2019. the increase is as a result of the increase in the company's earnings before mterest and taxes 122 Jose decrease m CAPEX FS to FCF Template