Key:

Linked Cell - No Action Required: Black

Hard Input - No Action Required: Blue
Empty - Action Required:
Complete - Correct Output Y
Complete - Incorrect Output Y

Analyst Actions:
You will be scored based on the following:
- Correct cell output
- Correct use of formulas (don't hardcode)
- Speed (make sure you submit before the time limit)
(Make sure to focus more on accuracy and quality, rather than speed)

- You will need to refer to the videos to support your working through the valuation model.
- You will only be able to take this simulation once. Make sure you have charge on your laptop and a fu

If you do require any support please email massupport@amplifyme.com or your course facilitator.
time limit)
quality, rather than speed)

port your working through the valuation model.

n once. Make sure you have charge on your laptop and a fully functioning Microsoft Excel.

massupport@amplifyme.com or your course facilitator.

105573
 Activsion Blizzard Inc.
ATVI

Income Statement
Amounts in millions Units
Revenue $m
Cost of Sales $m
Gross Profit $m
Product Development $m
Selling, General & Administrative $m
Operating Income $m
± Non-operating income (expense) $m
– Interest Expense $m
Pretax Income $m
– Tax Provision $m
Net Income $m

EBIT $m
Depreciation & Amortization $m
EBITDA $m
x
Income Statement Drivers Units
Revenue Growth %
Cost of Sales % Revenues %
Product Development as % Revenues %
Selling, General and Administrative Expenses % Revenues %
D&A as a % of Revenue %
D&A as a % Capital Expenditures
Interest Expense as a % of Total Debt %
Taxes % of Profit Before Tax %

Task 1 Balance Sheet

Balance Sheet
Amounts in millions Units
Total Cash $m
Held-to-maturity investments $m
 Accounts Receivable $m
Inventory $m
Other Current Assets $m
Total Current Assets $m
Net Property, Plant & Equipment (PPE) $m
Other Non-Current Assets $m
Goodwill $m
Total Assets $m

Accounts Payable $m
Other Current Liabilities $m
Total Current Liabilities $m
Long Term Debt $m
Deferred Tax Liabilities
Total Liabilities $m
Total Equity $m
Total Liabilities and Equity $m
Balance Sheet Parity Check

Balance Sheet Drivers Units

Accounts Receivable % Revenues %
Inventory % COGS %
Other Current Assets % Revenues %
Capital Expenditures $m
Capital Expenditures % Revenue
Accounts Payable % COGS %
Other Current Liabilities % Revenues %
LT Debt Repayment Schedule $m

Task 2 Cash Flow Statement

Cash Flow Statement

Amounts in millions Units
Net Income $
Depreciation & Amortization $
Stock Based Compensation $
Other $
Changes in operating assets and liabilities
Account Receivables $
Inventory $
Other Current Assets $
Accounts Payable $
 Other Current Liabilities $
Other Operating Assets and Liabilities
Cash Provided by Operating Activities: $

Capital Expenditures $
Purchase of available-for-sale investments $
Other investing activities $
Cash Flows from Investing Activities: $

Debt Issued $
Debt Repayments $
Common Stock Issued $
Dividends Paid $
Other
Cash Flows from Financing Activities: $

Effect of foreign exchange rate changes

Change in Cash $
Cash at Beginning of Period $
Cash at End of Period $

Cash Flow Drivers Units

Stock based compensation % SG&A %
Dividend Payout Ratio %

Task 3 Discounted Cash Flow Analysis

Weighted Average Cost of Capital

Risk free rate (Rf) 2.79% 1
Equity Beta 1.143 2
Equity risk premium (Rm - Rf) 5.75% 3
Cost of Equity (Ke) 9.4%

Cost of debt 3.53% 4

Tax rate 21.00%
After-tax Cost of Debt (Kdt) 2.8%
Percentage of Capital
Debt 3,611 6.3%
Equity 53,447 93.7%
Total capital 57,058 100.0%
Weighted Average Cost of Capital 9%
(1) As of Jan-14-2022, based on the current 10-year U.S. Treasury Bond Yield
(2) Based on a 5 year monthly equity beta
 (3) Implied ERP average yield last 20 years
(4) Based on weighted average historical cost of debt

Task 4.1 Discounted Cash Flow

Amounts in millions, except per share amount Units
EBIT $
Taxes @ 21.0% $
NOPAT $
+ Depreciation and Amortization $
± Changes in working capital $
– Capital expenditures $
Unlevered Free Cash Flows $
Discount rate %
Discount period #
Discount factor #
Present Value of Unlevered Free Cash Flow $

DCF Value - Perpetuity Growth

NPV of UFCF 2023 - 2027 9,886

PV of Terminal Value 37,897
Implied Enterprise Value 47,784
Less: Debt (3,611)
Add: Cash 7,060 Implied Value Per Share
Add: Held-to-Maturity Assets 4,932
Implied Equity Value 56,165
Diluted shares 786.798
Implied Value Per Share 71
WACC

Task 4 Comparable Company Analysis

Enterprise Value
Amounts in millions as of Jan-14-2022

Share price 67.930

Diluted Shares 786.798
Equity Value 53,447 EV / LTM Revenue
Total Debt 3,611 EV / LTM EBITDA
Cash 7,060
 Held-to Maturity Assets 4,932
Enterprise Value 45,066

Company
Nintendo Co., Ltd.
Electronic Arts Inc.
Take-Two Interactive Software, Inc.
Roblox Corporation
Playtika Holding Corp.
SciPlay Corporation
PLAYSTUDIOS, Inc.

Source: S&P Capital IQ, and company information

Note: Share prices and foreign exchange rates as at Jan-14-2022
All financials calendarized to December year end.

Activsion Blizzard Inc. Implied Enterprise Value

Valuation Analysis

Microsoft Offer Jan 18th 2022

Activision Blizzard Enterprise Value Jan 2022
Activision Blizzard DCF valuation Jan 2022
Activision Blizzard LTM EV/Revenue - Trading Comps
Activision Blizzard LTM EV/EBITDA - Trading Comps

Bonus Task Ratios and Key Metrics

Ratios and Key Metrics

Units

Profitability
Gross Profit Margin %
EBITDA Margin %
Operating Profit Margin %
Liquidity
Current Ratio x
Quick Ratio (Acid Test) x
Activity
Accounts Receivable Days Outstanding (DSO) #
Accounts Payable Days Outstanding (DPO) #
Leverage
Debt to Equity %
Debt to Capital %
Debt / EBITDA x
Coverage
EBITDA / Interest x
(EBITDA - CapEx) / Interest x
 Historical Projected
FY2019A FY2020A FY2021A FY2022A FY2023E FY2024E
6,489 8,086 8,803 9,657 11,106 12,633
2,094 2,260 2,317 2,222 3,554 3,916
4,395 5,826 6,486 5,306 7,552 8,716
998 1,150 1,337 1,421 2,554 2,741
1,790 1,942 1,890 2,215 2,765 3,019
1,607 2,734 3,259 1,670 2,232 2,956
116 (19) 13 182 70 70
(90) (99) (108) (108) (128) (119)
1,633 2,616 3,164 1,744 2,175 2,907
(130) (419) (465) (231) (457) (611)
1,503 2,197 2,699 1,513 1,718 2,297

1,607 2,734 3,259 1,670 2,232 2,956

328 197 116 106 267 296
1,935 2,931 3,375 1,776 2,499 3,252

-
24.6% 8.9% 9.7% 15.0% 13.8%
32.3% 27.9% 26.3% 29.5% 32.0% 31.0%
15.4% 14.2% 15.2% 18.9% 23.0% 21.7%
27.6% 24.0% 21.5% 29.4% 24.9% 23.9%
5.1% 2.4% 1.3% 1.4% 2.4% 2.3%
282.8% 252.6% 145.0% 116.5% 177.7% 173.6%
3.4% 2.7% 3.0% 3.0% 3.5% 3.5%
8.0% 16.0% 14.7% 13.2% 21.0% 21.0%

Historical Projected
FY2019A FY2020A FY2021A FY2022A FY2023E FY2024E
5,794 8,647 10,423 7,060 8,001 9,667
– – – 4,932 4,932 4,932
 848 1,052 972 1,204 1,555 1,769
– – – – – –
618 824 1,110 1,204 1,888 2,148
7,260 10,523 12,505 14,400 16,376 18,515
253 209 169 193 76 (49)
2,536 2,570 2,532 2,792 2,792 2,792
9,764 9,765 9,799 9,929 9,929 9,929
19,813 23,067 25,005 27,314 29,173 31,187

292 295 285 324 441 486

2,623 2,805 2,126 3,231 3,231 3,231
2,915 3,100 2,411 3,555 3,672 3,717
2,675 3,605 3,608 3,611 3,611 3,361
1,450 1,367 599 974 974 974
7,040 8,072 6,618 8,140 8,257 8,052
12,773 14,995 18,387 19,174 19,478 19,804
19,813 23,067 25,005 27,314 27,735 27,855
1 1 1 1 – –

-
13.1% 13.0% 11.0% 16.0% 14.0% 14.0%
0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
9.5% 10.2% 12.6% 16.0% 17.0% 17.0%
116 78 80 91 150 171
2.0% 2.8% 5.6% 2.3% 1.4% 1.4%
13.9% 13.1% 12.3% 14.6% 12.4% 12.4%
40.4% 34.7% 24.2% 42.9% 39.8% 39.8%
– 250

Historical Projected
FY2019A FY2020A FY2021A FY2022A FY2023E FY2024E
1,503 2,197 2,699 1,513 1,718 2,297
328 197 116 106 267 296
166 218 508 462 454 496
(59) 248 366 95 – –

182 (204) 80 (232) (351) (214)

– – – – – –
186 (206) (286) (94) (684) (260)
31 3 (10) 39 117 45
 (77) 182 (679) 1,105 – –
(419) (373) (371) (756) – –
1,841 2,262 2,423 2,238 1,520 2,661

(116) (78) (80) (91) (150) (171)

(65) (221) (248) (109) – –
159 121 269 (4,794) – –
(22) (178) (59) (4,994) (150) (171)

– 1,997 – – – –
– (1,050) – – – (250)
105 170 90 47 – –
(283) (316) (365) (367) (429) (574)
(59) (90) (246) (214) – –
(237) 711 (521) (534) (429) (824)

(7) 68 (58) (55) – –

1,575 2,863 1,785 (3,345) 941 1,666
4,229 5,794 8,647 10,423 7,060 8,001
5,804 8,657 10,432 7,060 8,001 9,667

-
9.3% 11.2% 26.9% 20.9% 16.4% 16.4%
18.8% 14.4% 13.5% 24.3% 25.0% 25.0%

Weighted average historical cost of debt

Rate Principal % total Weighted cost
3.4% 850.0 23.5% 0.80%
4.5% 361.0 10.0% 0.45%
5.4% 500.0 13.8% 0.75%
4.5% 400.0 11.1% 0.50%
2.5% 1,500.0 41.5% 1.04%
3,611.0 100.0% 3.53%
 Projected
FY2023E FY2024E FY2025E FY2026E FY2027E
2,232 2,956 3,795 4,743 5,791
(469) (621) (797) (996) (1,216)
1,763 2,335 2,998 3,747 4,575
267 296 325 353 379
(918) (428) (446) (456) (455)
(150) (171) (192) (214) (235)
962 2,032 2,685 3,431 4,265
8.94% 8.94% 8.94% 8.94% 8.94%
1 2 3 4 5
0.92 0.84 0.77 0.71 0.65
883 1,712 2,076 2,436 2,779

Terminal Value - Perpetuity Growth

FY2027E Unlevered Free Cash Flow 4,265
Perpetuity growth rate 1.50%
Terminal Value 58,157
Implied Exit Multiple 9.4x

Implied Value Per Share

Perpetuity Growth Rate
71.38 1.00% 1.25% 0 1.75% 2.00%
8.44%
8.69%
0
9.19%
9.44%

Enterprise Value Multiples

FY2022A FY2023E FY2024E FY2025E
LTM Revenue 10,381 11,106 12,633 14,212
LTM EBITDA 2,137 2,499 3,252 4,120
EV / LTM Revenue 4.3x 4.1x 3.6x 3.2x
EV / LTM EBITDA 21.1x 18.0x 13.9x 10.9x
 Market Enterprise Enterprise Value / Revenue Enterprise Value / EBITDA
Value Value LTM FY2023E FY2024E LTM
53,505 40,598 2.79x 3.39x 4.08x 7.7x
36,920 36,778 5.65x 5.09x 4.65x 27.4x
17,610 15,308 4.48x 2.50x 2.18x 19.1x
51,109 49,194 NMF 14.68x 12.48x NMF
7,767 9,210 3.57x 3.27x 3.46x 13.5x
304 389 0.64x 0.82x 0.50x 2.2x
616 391 1.36x 0.93x 1.17x NMF

High 5.6x 14.7x 12.5x 27.4x

Mean 1.0x 0.9x 0.8x 2.2x
Median 1.0x 0.9x 0.8x 2.2x
Low 0.6x 0.8x 0.5x 2.2x

53,447 45,066 10,385 9,730 10,550 4,655

Enterprise Premium to Jan

Per Share
Value 2022 Offer Your Recommendation:
68,700 95.00
45,066 67.93 40% Justification:
47,784 71.38 33%
10,385 13.20 620%
4,655 5.92 1506%

It is not high enough to mak

Historical Projected
FY2019A FY2020A FY2021A FY2022A FY2023E FY2024E

67.7% 72.1% 73.7% 54.9% 68.0% 69.0%

29.8% 36.2% 38.3% 18.4% 22.5% 25.7%
24.8% 33.8% 37.0% 17.3% 20.1% 23.4%

2.5x 3.4x 5.2x 4.1x 4.5x 5.0x

2.3x 3.1x 4.7x 2.3x 2.6x 3.1x
 42.9 42.0 41.1 45.3 48.0
47.4 45.7 50.0 39.3 43.2

20.9% 24.0% 19.6% 18.8% 18.5% 17.0%

17.3% 19.4% 16.4% 15.8% 15.6% 14.5%
1.4x 1.2x 1.1x 2.0x 1.4x 1.0x

21.5x 29.6x 31.3x 16.4x 19.6x 27.4x

20.2x 28.8x 30.5x 15.6x 18.4x 25.9x
Projected CAGR
FY2025E FY2026E FY2027E 2022 - 2027
14,212 15,810 17,391 12.5%
4,263 4,585 4,870
9,948 11,225 12,522 You have
2,899 3,020 3,096
already
3,254 3,462 3,635
completed the
3,795 4,743 5,791
Income
Statement!
70 70 70
(110) (80) (66)
3,755 4,733 5,796
(788) (994) (1,217)
2,966 3,739 4,579

3,795 4,743 5,791

325 353 379
4,120 5,097 6,171

Step
12.5% 11.3% 10.0% (1.2%)
30.0% 29.0% 28.0% (1.0%)
20.4% 19.1% 17.8% (1.3%)
22.9% 21.9% 20.9% (1.0%)
2.3% 2.2% 2.2% (0.1%)
169.6% 165.5% 161.4%
3.5% 3.5% 3.5%
21.0% 21.0% 21.0%

Projected
FY2025E FY2026E FY2027E
11,863 14,071 17,391
4,932 4,932 4,932
 1,990 2,213 2,435
– – –
2,416 2,688 2,957
21,201 23,904 27,715
(183) (323) (467)
2,792 2,792 2,792
9,929 9,929 9,929
33,739 36,302 39,969
Task 1: https://youtu.be/H
529 569 604
3,231 3,231 3,231
3,760 3,800 3,835
3,111 2,261 1,861 Task 1: https://youtu.be/H-vvDy0dX4c
974 974 974
7,845 7,035 6,670
20,146 20,502 20,864
27,991 27,536 27,534
– – –

Step
14.0% 14.0% 14.0%
0.0% 0.0% 0.0%
17.0% 17.0% 17.0%
192 214 235
1.4% 1.4% 1.4%
12.4% 12.4% 12.4%
39.8% 39.8% 39.8%
250 850 400

Projected
FY2025E FY2026E FY2027E
2,966 3,739 4,579
325 353 379
535 569 597
– – –

(221) (224) (221)

– – –
(268) (272) (269)
43 40 35

Task 2: https://youtu.be/e
 – – –
– – –
3,380 4,206 5,100
Task 2: https://youtu.be/e

(192) (214) (235)

– – –
– – – Task 2: https://youtu.be/eHsQsGj3ofM
(192) (214) (235)

– – –
(250) (850) (400)
– – –
(742) (935) (1,145)
– – –
(992) (1,785) (1,545)

– – –
2,196 2,208 3,321
9,667 11,863 14,071
11,863 14,071 17,391

Step
16.4% 16.4% 16.4%
25.0% 25.0% 25.0%

Task 3: https://youtu.be/W

Task 3: https://youtu.be/WxoGiOQlQKk
 Task 3.1: https://youtu.be/

Task 3.1: https://youtu.be/nU_HilBSWT8

Steps
Perp. Growth 0.25%

WACC 0.25%

Note: NO RED/GREEN
FORMATTING ON THESE
CELLS!! (Complete every Task 4: https://youtu.be/1
yellow cell)
 FORMATTING ON THESE
Task 4: https://youtu.be/1
CELLS!! (Complete every
yellow cell)

Task 4: https://youtu.be/1UJorCXfWlU

Enterprise Value / EBITDA

FY2023E FY2024E
14.5x 12.9x
16.5x 12.2x
22.2x 9.4x
NMF NMF
14.1x 10.6x
4.8x 1.7x
9.7x 6.0x

22.2x 12.9x
7.2x 3.9x
7.2x 3.9x
4.8x 1.7x

18,112 12,563

Reject the Offer

<< Your
recommendation
should be focused on
whether Microsoft
should push on, or
withdraw from the deal

It is not high enough to make any profit

Projected
FY2025E FY2026E FY2027E

70.0% 71.0% 72.0% Note: NO VIDEO

29.0% 32.2% 35.5% (green/red reinstated)
26.7% 30.0% 33.3%

5.6x 6.3x 7.2x

3.7x 4.3x 5.2x
 48.3 48.5 48.8
43.4 43.7 43.9

15.4% 11.0% 8.9% No Red/Green

13.4% 9.9% 8.2% column Q!
0.8x 0.4x 0.3x

37.5x 63.8x 93.8x

35.7x 61.1x 90.2x
 You have
already
completed the
Income
Statement!
ask 1: https://youtu.be/H-vvDy0dX4c

ps://youtu.be/H-vvDy0dX4c

ask 2: https://youtu.be/eHsQsGj3ofM
ask 2: https://youtu.be/eHsQsGj3ofM

ps://youtu.be/eHsQsGj3ofM

sk 3: https://youtu.be/WxoGiOQlQKk

ps://youtu.be/WxoGiOQlQKk
sk 3.1: https://youtu.be/nU_HilBSWT8

ttps://youtu.be/nU_HilBSWT8

ask 4: https://youtu.be/1UJorCXfWlU
ask 4: https://youtu.be/1UJorCXfWlU

ps://youtu.be/1UJorCXfWlU
No Red/Green
column Q!
105573