Determine free cash flow


Question Description:

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Determine free cash flow,financial statement projections and intrinsic value estimation Document Preview: ActualHistorical AnalysisWACCInputsProjection of FCFProj. of Financials & Valuationch5data3-year AverageCOGS / SalesSGA / SalesDepreciation / Net PPERatios to calculate operating capitalCash / SalesInventory/ SalesAccts. Rec. / SalesNet PPE / SalesAccts. Pay./ SalesAccruals / SalesRatios to calculate operating taxesTax Rate (Taxes/EBT)TaxesDividendsTotal current assetsTotal assetsTotal current liabilitiesLong-term debtTotal liabilitiesTotal common equityTotal liabilities and equityNOPATCashInventoryAccounts receivableAccounts payableAccrued expensesShort-term debtRetained earningsDepreciationInterest expenseOperating profitFree Cash FlowActualProjectedIncome StatementNet SalesInterest incomeEarnings before taxesgrowth rate in free cash flowCost Of Goods SoldSelling, general & administrative After-tax cost of long-term debt=Calculation of WACCBeta=discrepancyEstimated price per share, end of 2003 fiscal year= 1 – debt ratioHorizon valueEstimate Cost of EquityProportions of Long-term Debt and Equity FinancingCost of DebtProjected ParametersTotal value of firm Calculation of Historical RatiosRatios to calculate operating profitRatios to calculate operating proftValue of all debt, preferred stock, and other nonoperating liabilitiesValue of equityTotal operating current assetsWACC=Total net operating assetsTotal operating current liabilitiesmaking the sheets balancefree cash flowspecified assetsspecified liabilitiesDividend and debt ratiosDividend policy: growth rateLong-term Debt / operating assetsInterest RatesInterest rate on short-term invest.Interest rate on debtasset-liability gapDetermine total firm value, then deduct the value of nonequity claims to arrive at the value of equity, and finally, calculate per share value.Net incomeAdditions to REBalance sheetShort term investmentsNet PP&ECommon stockOperating IncomeTax on Operating Income (40%)Net Operating WCNet Operating Long Term AssetsTotal Net Operating AssetsInvestment in net operating assetsgrowth in… Attachments: Prob-07-03.xls Prob-06-01.xls

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