Please see business-valuation.

net
tutorial on how to use the DCF model
luck!

Date: 3/19/2018
Author: Business-valuation.net
 aluation.net for a
e DCF model. Good
 Input
Last Fiscal Year 2017
Corporate tax rate 30%
 Actual Forecast p
2014A 2015A 2016A 2017A 2018E

Net sales 2,955 3,568 4,102 4,663 5,036

growth, % 20.7% 15.0% 13.7% 8.0%
COGS -2,098 -2,516 -2,831 -3,310 -3,544
Gross profit 857 1,053 1,272 1,352 1,492
margin, % 29.0% 29.5% 31.0% 29.0% 29.6%
OPEX -180 -200 -210 -215 -224
growth, % 11.1% 5.0% 2.4% 4.0%
in % of net sales 6.1% 5.6% 5.1% 4.6% 4.4%
EBITDA 677 853 1,062 1,137 1,268
margin, % 22.9% 23.9% 25.9% 24.4% 25.2%
Depreciation -49 -63 -75 -84 -88
in % of net sales 1.6% 1.8% 1.8% 1.8% 1.8%
EBIT 628 790 987 1,053 1,180
Tax (30%) -119 -138 -151 -164 -354
Capex -79 -41 -169 -115
in % of net sales 2.2% 1.0% 3.6% 2.3%
Increase/Decrease in NWC -25 -5 -2 -15
Unlevered Free Cash Flow 611 865 802 785

DCF-valuation Implied multiples 2017A

Enterprise value ("EV") 11,012 Sales 2.4x
Equity value ("market cap") 10,812 EBITDA 9.7x
Price per share 1.08 EBIT 10.5x

Source: business-valuation.net

Terminal Value
Terminal Year Free Cash Flow 995
Perpetuity Growth Rate 2.0%
Terminal Year EBITDA 1,591
Terminal Value 12,250
Implied Exit Multiple 8.1x
Discount Period 5.0
Discount Factor 0.6
Present Value of Terminal Value 7,508
% of Enterprise Value 68%
 Forecast period CAGR CAGR
2019E 2020E 2021E 2022E 2014-2017A 2018-2022E

5,388 5,711 5,997 6,237 16.4% 5.5%

7.0% 6.0% 5.0% 4.0%
-3,792 -4,019 -4,220 -4,389 16.4% 5.5%
1,596 1,692 1,777 1,848 16.4% 5.5%
29.6% 29.6% 29.6% 29.6%
-232 -240 -249 -257 6.1% 3.5%
3.8% 3.6% 3.4% 3.3%
4.3% 4.2% 4.1% 4.1%
1,364 1,452 1,528 1,591 18.9% 5.8%
25.3% 25.4% 25.5% 25.5%
-95 -100 -105 -110 19.8% 5.5%
1.8% 1.8% 1.8% 1.8%
1,270 1,351 1,423 1,481 18.8% 5.9%
-381 -405 -427 -444 11.4% 5.9%
-123 -130 -136 -142 n.a. 0
2.3% 2.3% 2.3% 2.3%
-14 -13 -11 -9
847 904 954 995

2018E 2019E 2020E 2021E

2.2x 2.0x 1.9x 1.8x
8.7x 8.1x 7.6x 7.2x
9.3x 8.7x 8.1x 7.7x
Wacc Calculation

Target Capital Structure

Debt to Total Capitalization 29.1%
Equity to Total Capitalization 70.9%
Debt to Equity Ratio 41.8%

Cost of Equity
Risk-free rate (2) 2.5%
Market risk Premium (3) 7.1%
Levered Beta (4) 1.22
Size Premium (5) 1.7%
Cost of Equity 12.8%

Cost of Debt
Cost of Debt 6.0%
Corporate tax rate 30.0%
After Tax Cost of Debt 4.2%

WACC 10.3%
Comments

Obtained from Beta and Capital Structure tab

Obtained from Beta and Capital Structure tab

Interpolated Yield on 10-year Treasury bond

Obtained from Ibbotson SBBI Valuation Yearbook
Obtained from Beta and Capital Structure tab
Low-Cap Decile size premium based on market capitalization, per Ibbotson

Obtained from Input sheet

Comparable Companies Unlevered Beta

Levered Beta Market Value of Market Value of Equity/ Total

Company Debt/ Equity
(1) Debt (2) Equity (3) Assets
[XYZ] 1.23 500 1125 44.4% 69.2%
[XYZ] 1.31 400 868 46.1% 68.5%
[XYZ] 1.15 450 788 57.1% 63.6%
[XYZ] 1.12 375 1125 33.3% 75.0%
[XYZ] 1.25 250 900 27.8% 78.3%
Median 1.23 44.4% 69.2%
Mean 1.21 41.8% 70.9%

(1) From Bloomberg

(2) Book Value of Debt
(3) From Bloomberg
(4) Unlevered Beta = Predicted Levered Beta / (1 + Debt/Equity) x (1-t))

Target
Relevered Mean Unlevered Mean Target Relevered
Marginal Tax
Beta Beta Debt/ Equity Beta
Rate

Target Company 0.94 41.8% 30% 1.22

 Unlevered
Tax Rate
Beta (4)
30% 0.94
30% 0.99
30% 0.82
30% 0.91
30% 1.05
0.94
0.94