Question
You need to complete a DCF Valuation Analysis for company XYZ.Specifically you are still missing the Terminal Value component of your valuation,For simplicity you decide
You need to complete a DCF Valuation Analysis for company XYZ.Specifically you are still missing the Terminal Value component of your valuation,For simplicity you decide to estimate the Terminal Value using the Exit Multiple methodology. Calculate the Enterprise Value of the company assuming an Exit multiple of 22x (EV/EBITDA).
| XYZ | |||||||||||||
| Discounted Cash Flow Analysis | |||||||||||||
| ($ in millions, fiscal year ending December 31) | Operating Scenario | Base | |||||||||||
| Operating Scenario | 1 | ||||||||||||
| Mid-Year Convention | N | Historical Period | CAGR | LTM | Projection Period | CAGR | |||||||
| 2014 | 2015 | 2016 | 2014-2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2018-2022 | |||
| Sales | $1,157.4 | $1,228.9 | $1,364.6 | 8.6% | $1,560.0 | $1,684.8 | $1,819.6 | $1,965.2 | $2,122.4 | $2,292.2 | 8.0% | ||
| % growth | NA | 6.2% | 11.0% | 14.3% | 8.0% | 8.0% | 8.0% | 8.0% | 8.0% | ||||
| Cost of Goods Sold | 190.5 | 201.4 | 254.2 | 263.8 | 314.5 | 339.7 | 366.8 | 396.2 | 427.9 | ||||
| Gross Profit | $966.9 | $1,027.5 | $1,110.4 | 7.2% | $1,296.2 | $1,370.3 | $1,479.9 | $1,598.3 | $1,726.2 | $1,864.3 | 7.5% | ||
| % margin | 83.5% | 83.6% | 81.4% | 83.1% | 81.3% | 81.3% | 81.3% | 81.3% | 81.3% | ||||
| Selling, General & Administrative | 26.9 | 26.3 | 26.3 | 28.2 | 33.6 | 36.3 | 39.2 | 42.4 | 45.7 | ||||
| EBITDA | $940.0 | $1,001.2 | $1,084.1 | 7.4% | $1,268.0 | $1,336.7 | $1,443.6 | $1,559.1 | $1,683.8 | $1,818.5 | 7.5% | ||
| % margin | 81.2% | 81.5% | 79.4% | 81.3% | 79.3% | 79.3% | 79.3% | 79.3% | 79.3% | ||||
| Depreciation & Amortization | 326.4 | 312.5 | 356.5 | 369.9 | 441.0 | 476.3 | 514.4 | 555.5 | 600.0 | ||||
| EBIT | $613.6 | $688.7 | $727.6 | 8.9% | $898.1 | $895.7 | $967.3 | $1,044.7 | $1,128.3 | $1,218.6 | 6.3% | ||
| % margin | 53.0% | 56.0% | 53.3% | 57.6% | 53.2% | 53.2% | 53.2% | 53.2% | 53.2% | ||||
| Taxes | 58.5 | 5.0 | 0.6 | 19.0 | 28.9 | 31.2 | 33.7 | 36.3 | 39.3 | ||||
| EBIAT | $555.1 | $683.7 | $727.0 | 14.4% | $879.1 | $866.8 | $936.2 | $1,011.1 | $1,092.0 | $1,179.3 | 6.1% | ||
| Plus: Depreciation & Amortization | 326.4 | 312.5 | 356.5 | 369.9 | 441.0 | 476.3 | 514.4 | 555.5 | 600.0 | ||||
| Less: Capital Expenditures | (261.7) | (887.6) | (390.2) | (387.1) | - | - | - | - | - | ||||
| Less: Inc./(Dec.) in Net Working Capital | 109.6 | 54.2 | 58.5 | 63.2 | 68.2 | ||||||||
| Unlevered Free Cash Flow | $1,417.5 | $1,466.6 | $1,583.9 | $1,710.7 | $1,847.5 | ||||||||
| WACC | 8.500% | ||||||||||||
| Discount Period | 1.0 | 2.0 | 3.0 | 4.0 | 5.0 | ||||||||
| Discount Factor | 0.92 | 0.85 | 0.78 | 0.72 | 0.67 | ||||||||
| Present Value of Free Cash Flow | $1,306.4 | $1,245.8 | $1,240.1 | $1,234.4 | $1,228.7 | ||||||||
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The Routledge Handbook Of Critical Finance Studies
Authors: Christian Borch, Robert Wosnitzer
1st Edition
1138079812, 978-1138079816
