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    Firm Valuation - FCFF & FCFE

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    Sunny Bohra
    This document provides key assumptions for a discounted cash flow valuation of a company. It assumes annual sales growth of 10%, cost of goods sold of 55% of sales, tax rate of 30%, depreciation rate of 15%, and a weighted average cost of capital of 17.72%. The terminal value is calculated using a perpetual growth rate of 5% and the terminal free cash flow of year 5. Key outputs include the valuation of equity per share and the depreciation, working capital, and WACC schedules.

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    Firm Valuation - FCFF & FCFE

    Uploaded by

    Sunny Bohra
    119 views5 pages
    This document provides key assumptions for a discounted cash flow valuation of a company. It assumes annual sales growth of 10%, cost of goods sold of 55% of sales, tax rate of 30%, depreciation rate of 15%, and a weighted average cost of capital of 17.72%. The terminal value is calculated using a perpetual growth rate of 5% and the terminal free cash flow of year 5. Key outputs include the valuation of equity per share and the depreciation, working capital, and WACC schedules.

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    Firm Valuation- FCFF & FCFE

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    This document provides key assumptions for a discounted cash flow valuation of a company. It assumes annual sales growth of 10%, cost of goods sold of 55% of sales, tax rate of 30%, depreciation rate of 15%, and a weighted average cost of capital of 17.72%. The terminal value is calculated using a perpetual growth rate of 5% and the terminal free cash flow of year 5. Key outputs include the valuation of equity per share and the depreciation, working capital, and WACC schedules.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    119 views5 pages

    Firm Valuation - FCFF & FCFE

    Uploaded by

    Sunny Bohra
    This document provides key assumptions for a discounted cash flow valuation of a company. It assumes annual sales growth of 10%, cost of goods sold of 55% of sales, tax rate of 30%, depreciation rate of 15%, and a weighted average cost of capital of 17.72%. The terminal value is calculated using a perpetual growth rate of 5% and the terminal free cash flow of year 5. Key outputs include the valuation of equity per share and the depreciation, working capital, and WACC schedules.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 5

    Basis and Assumption Sheet

    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12

    The asset turnover ratio is on an average


    Sales will grow at the rate of
    COGS is assumed to be
    Administrative expenses assumed to be
    Selling & Distribution expenses assumed to be
    Depreciation rate
    Working capital requirement
    Existing Debt:Equity ratio is
    Rate of Interest on Term loan is
    Govt T Bill rate is
    Return on Market
    Beta coefficient of the company

    13 Tax rate is assumed to be


    14 Terminal growth rate at the end of 5 years
    Cash flows of year 5 are assumed to grow as per this assumption

    3
    10%
    55%
    10%
    12%
    15%
    20%
    40%
    14%
    8%
    20%
    1.25
    30%
    5%

    times in this industry


    p.a. from the current level of sales
    of sales in this business
    of sales in this business
    of sales in this business
    WDV of the assets
    of sales in this business
    debt and
    p.a.
    p.a.
    p.a.
    times

    p.a. on a perpetual basis

    60% equity

    Sales
    Cost of goods sold
    Administrative expenses
    Selling & Distribution expenses
    PBDIT
    Depreciation
    PBIT
    tax @30%
    NOPAT
    Add: Depreciation
    Cash Flow
    Add/Less: Working Capital changes
    Add/Less: Capital expenditure changes
    Free Cash Flow to Firm (FCFF)
    Terminal value of firm
    PVIF calculated at wacc
    PV of FCFF
    Total PV of the firm at the end of year 0
    Value of debt at present- end of year 0
    Value of equity
    Total no of equity shares
    Value per equity share

    Actual
    Estimated Estimated
    Year-0
    1
    2
    11475
    12623
    13885
    6311
    6942
    7637
    1148
    1262
    1388
    1377
    1515
    1666
    2639
    2903
    3193
    675
    739
    808
    1964
    2164
    2386
    589
    649
    716
    1375
    1515
    1670
    675
    739
    808
    2050
    2254
    2478
    230
    252
    278
    1100
    1200
    1400
    720
    801
    800
    0.849
    681
    7411
    2448
    4963
    367.2
    13.52

    0.722
    577

    Estimated Estimated Estimated


    3
    4
    5
    15273
    16801
    18481
    8400
    9240
    10164
    1527
    1680
    1848
    1833
    2016
    2218
    3513
    3864
    4251
    897
    987
    1079
    2616
    2877
    3171
    785
    863
    951
    1831
    2014
    2220
    897
    987
    1079
    2728
    3001
    3299
    305
    336
    370
    1500
    1600
    1700
    923
    1065
    1230
    10149
    0.613
    0.521
    0.442
    566
    555
    5033

    Depreciation Schedule & Fixed Asset Block

    Opening Balance: Net Block


    Addition to fixed assets
    Sale of fixed assets
    Depreciable Block
    Less: Depreciation for the year
    Closing Balance: Net Block

    3.00
    Actual
    Year-0
    4500
    0
    0
    4500
    675
    3825

    Working capital schedule

    Sales
    Working capital as 20% of sales
    Incremental working capital

    Actual
    Year-0
    11475
    2295
    230

    WACC calculation

    Total assets (Net Block + Working Capital)


    Debt @ 40%
    Equity @ 60% (FV per share Rs. 10/-)
    Cost of debt
    Cost of equity as per CAPM
    WACC

    Actual
    Year-0
    6120
    2448
    3672
    9.80%
    23.00%
    17.72%

    Terminal value calculation


    FCFF of year 5
    Terminal growth rate
    WACC
    Terminal value

    1230
    5%
    17.72%
    10149

    3.02
    3.03
    3.01
    3.00
    3.02
    0
    Estimated Estimated Estimated Estimated Estimated Estimated
    1
    2
    3
    4
    5
    6
    3825
    4186.25 4578.313 5081.566 5594.331 6115.181
    1100
    1200
    1400
    1500
    1600
    1700
    4925
    738.75
    4186.25

    5386.25
    807.9375
    4578.313

    5978.313
    896.7469
    5081.566

    6581.566
    987.2348
    5594.331

    7194.331
    1079.15
    6115.181

    7815.181
    1172.277
    6642.904

    Estimated Estimated Estimated Estimated Estimated Estimated


    1
    2
    3
    4
    5
    6
    12623
    13885
    15273
    16801
    18481
    20329
    2525
    2777
    3055
    3360
    3696
    4066
    252
    278
    305
    336
    370
    0

    Estimated Estimated Estimated Estimated Estimated Estimated


    1
    2
    3
    4
    5
    6
    6711
    7355
    8136
    8954
    9811
    10709
    2684
    2942
    3254
    3582
    3925
    4283
    4026
    4413
    4882
    5373
    5887
    6425

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