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the following is the exact same info presented differently... please include all excel formulas used, for the yellow boxes, i really need to learn excel
the following is the exact same info presented differently... please include all excel formulas used, for the yellow boxes, i really need to learn excel
The Henley Corporation is a privately held company specializing in lawn care products and services. The most recent financial statements are shown below. | |||||
Income Statement for the Year Ending December 31 (Millions of Dollars) | |||||
2012 | |||||
Net Sales | $ 800.0 | ||||
Costs (except depreciation) | $ 576.0 | ||||
Depreciation | $ 60.0 | ||||
Total operating costs | $ 636.0 | ||||
Earning before int. & tax | $ 164.0 | ||||
Less interest | $ 32.0 | ||||
Earning before taxes | $ 132.0 | ||||
Taxes (40%) | $ 52.8 | ||||
Net income before pref. div. | $ 79.2 | ||||
Preferred div. | $ 1.4 | ||||
Net income avail. for com. div. | $ 77.9 | ||||
Common dividends | $ 31.1 | ||||
Addition to retained earnings | $ 46.7 | ||||
Number of shares (in millions) | 10 | ||||
Dividends per share | $ 3.11 | ||||
Balance Sheets for December 31 (Millions of Dollars) | |||||
Assets | 2012 | Liabilities and Equity | 2012 | ||
Cash | $ 8.0 | Accounts Payable | $ 16.0 | ||
Marketable Securities | 20.0 | Notes payable | 40.0 | ||
Accounts receivable | 80.0 | Accruals | 40.0 | ||
Inventories | 160.0 | Total current liabilities | $ 96.0 | ||
Total current assets | $ 268.0 | Long-term bonds | $ 300.0 | ||
Net plant and equipment | 600.0 | Preferred stock | $ 15.0 | ||
Total Assets | $ 868.0 | Common Stock (Par plus PIC) | $ 257.0 | ||
Retained earnings | 200.0 | ||||
Common equity | $ 457.0 | ||||
Total liabilities and equity | $ 868.0 | ||||
Projected ratios and selected information for the current and projected years are shown below. | |||||
Inputs | Actual | Projected | Projected | Projected | Projected |
2012 | 2013 | 2014 | 2015 | 2016 | |
Sales Growth Rate | 15% | 10% | 6% | 6% | |
Costs / Sales | 72% | 72% | 72% | 72% | 72% |
Depreciation / Net PPE | 10% | 10% | 10% | 10% | 10% |
Cash / Sales | 1% | 1% | 1% | 1% | 1% |
Acct. Rec. / Sales | 10% | 10% | 10% | 10% | 10% |
Inventories / Sales | 20% | 20% | 20% | 20% | 20% |
Net PPE / Sales | 75% | 75% | 75% | 75% | 75% |
Acct. Pay. / Sales | 2% | 2% | 2% | 2% | 2% |
Accruals / Sales | 5% | 5% | 5% | 5% | 5% |
Tax rate | 40% | 40% | 40% | 40% | 40% |
Weighted average cost of capital (WACC) | 10.5% | 10.5% | 10.5% | 10.5% | 10.5% |
a. Forecast the parts of the income statement and balance sheets necessary to calculate free cash flow. | |||||
Partial Income Statement for the Year Ending December 31 (Millions of Dollars) | |||||
Actual | Projected | Projected | Projected | Projected | |
2012 | 2013 | 2014 | 2015 | 2016 | |
Net Sales | $ 800.0 | ||||
Costs (except depreciation) | $ 576.0 | ||||
Depreciation | $ 60.0 | ||||
Total operating costs | $ 636.0 | ||||
Earning before int. & tax | $ 164.0 | ||||
Partial Balance Sheets for December 31 (Millions of Dollars) | |||||
Actual | Projected | Projected | Projected | Projected | |
Operating Assets | 2012 | 2013 | 2014 | 2015 | 2016 |
Cash | $ 8.0 | ||||
Accounts receivable | $ 80.0 | ||||
Inventories | $ 160.0 | ||||
Net plant and equipment | $ 600.0 | ||||
Operating Liabilities | |||||
Accounts Payable | $ 16.0 | ||||
Accruals | $ 40.0 | ||||
b. Calculate free cash flow for each projected year. Also calculate the growth rates of free cash flow each year to ensure that there is constant growth (i.e., the same as the constant growth rate in sales) by the end of the forecast period. | |||||
Actual | Projected | Projected | Projected | Projected | |
Calculation of FCF | 2012 | 2013 | 2014 | 2015 | 2016 |
Operating current assets | |||||
Operating current liabilities | |||||
Net operating working capital | |||||
Net PPE | |||||
Net operating capital | |||||
NOPAT | |||||
Investment in operating capital | na | ||||
Free cash flow | na | ||||
Growth in FCF | na | na | |||
Growth in sales | |||||
d. Calculate the value of operations and MVA. (Hint: first calculate the horizon value at the end of the forecast period, which is equal to the value of operations at the end of the forecast period. Assume that the annual growth rate beyond the horizon is 6 percent.) | |||||
Actual | Projected | Projected | Projected | Projected | |
2012 | 2013 | 2014 | 2015 | 2016 | |
Free cash flow | |||||
Long-term constant growth in FCF | |||||
Weighted average cost of capital (WACC) | 10.5% | 10.5% | 10.5% | 10.5% | 10.5% |
Horizon value | |||||
FCF in Years 1-3 and FCF4 + horizon value in Year 4 | |||||
Value of operations (PV of FCF + HV) | |||||
Operating capital | |||||
Market value added (MVA=Market value of company - book value of company = Value of operations - Operating capital) | |||||
e. Calculate the price per share of common equity as of 12/31/2012. | |||||
Actual | |||||
2012 | |||||
Value of Operations | |||||
Plus Value of Mkt. Sec. | |||||
Total Value of Company | |||||
Less Value of Debt | |||||
Less Value of Pref. | |||||
Value of Common Equity | |||||
Divided by number of shares | |||||
Price per share |
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