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Choose a non-bank listed firm (except Tesla or BYD which will be demonstrated in class) from any country with suitable da
Answer the questions and fill in the yellow cells requiring numerical answers which will be machine-marked. Some questio
Download your firm's financial statement data including its P&L, balance sheet and cash flow statement. Factset, WSJ, Yah
Make financial statement forecasts of the firm's P&L, balance sheet and cash flow statements over the forecast horizon.
The template is designed to help you model and present your valuation.
In class we'll go through the steps to link these yellow cells to the data and make nicer graphs which will be a fun exercise.
The class will be recorded and posted online for everyone to see.
Note that:
The cash flow statement forecast formulas assume that only the retained profits and contributed equity (or share capital)
Therefore accumulated minority interests, reserves and other book equity accounts besides retained profits and contr
Your firm must have some debt funding in your forecast. If it doesn’t have any debt, add some by issuing debt.
You will lose marks if you assume that there's zero debt since that dodges the questions related to interest tax shields
m any country with suitable data and value it using the template provided.
achine-marked. Some questions require you to make graphs in the yellow space which will be teacher-marked.
w statement. Factset, WSJ, Yahoo Finance and DB Hoovers are good sources.
ts over the forecast horizon.
uted equity (or share capital) in the balance sheet change from year to year during the forecast period.
ides retained profits and contributed equity should remain unchanged in your balance sheet forecasts (but may well change in the his
me by issuing debt.
related to interest tax shields and makes part of the assignment too easy.
y well change in the historical period).
Date 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15
Time -9 -8 -7 -6 -5
Data Historical Historical Historical Historical Historical
Question 1:
Fill in the cells that you can. Some such as FCF will require you to finish the financial statement modelling fi
Question 2:
Conduct a multiples valuation.
The weights should be used to calculate the 'estimated share price (multiples triangulation) from the prior question.
Question 3:
Conduct a sensitivity analysis of WACC and temrinal growth rate. .
Ensure that the base case is shown in the table in the same row as the WACC label
and the same column as the terminal growth rate label.
Use conditional formatting to shade the table.
Question 4a:
Find the WACC that makes the DCF share price valuation equal to the market share price (IRR).
Question 4b:
Find the WACC that makes the DCF share price valuation equal to the triangulated multiples share price valuation.
Question 4c:
Make a graph (scatterplot with smooth lines) that shows the WACC on the x-axis and
the DCF share price estimate on the y-axis.
Clearly mark the:
Base case DCF estimated share price;
The market share price and corresponding WACC from previous question; and the
Weighted average multiples estimate and corresponding WACC from previous question.
Question 5:
Graph the following variables over the entire history and forecast horizon.
Question 6:
Graph the FCF and its components over all forecast years.
Question 7:
Complete a DuPont analysis for all years in the past and future and present it in a graph with a primary (LHS) and secondar
31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15
Profit margin (LHS)
Asset turnover (RHS)
Equity multiplier (RHS)
RoE (LHS)
Question 8:
Fill in the template below which can be used to forecast the cash flow statement's 'net change in cash'
which adds to the balance sheet's cash each year and makes the balance sheet balance, so A=L+OE.
Hard-coded data is provided for the past so you can see what it should look like for the Tesla valuation done in class. But m
Historical Historical Historical Historical Historical
BalanceSheetFundingDeficiency = A-L-OE 0 0 0 0 0
Question 9a:
As an academic exercise, demonstrate the two different methods of calculating FFCFwITS:
DebtCashFlowPaidToDebtHoldersExclCashLentToBank, assumes interest expense is equal to interest paid which might not
FFCFwITS = DebtCashFlow + EFCF = Firm free cash flow with interest tax shields
Interest tax shield per year (ITS)
FFCFwITS = OFCF+ITS
Question 9a
Demonstrate the two different methods of calculating enterprise value with interest tax shields in the WACC or in the cash
WACC before tax based on Question 1 WACC after tax. Assume that the WACC before tax is constant so all future years' va
EnterpriseValue based on PV of FFCFwITS using WACC before tax as at each time, a moment after the cash flow at that tim
D/VwITS, debt-to-assets ratio, where the assets (actually enterprise value) includes the benefit of interest tax shields
Question 10:
This question provides freedom to show creativity and expert analysis.
There are less rigid requiremnents unlike other questions.
Make your own graph that supports your valuation and would be nice to show in a presentation.
The graph should stand on its own so it requires no textual explanation besides any description in sub-headings or footnot
Markers will not read essays or long descriptions in this section, this is supposed to be a graph that visually conveys an ide
Your graph might help display bottom-up or top-down analysis and could be based on the financial statement data
about your firm or data from some other source such as the IMF, World Bank, central bank (say RBA) or other statistical s
Include just one graph, though the graph can show multiples series with different LHS and RHS axes.
Note: This cell should be A280. If it's not, you've inserted rows or columns and the auto-marking formulas will not work
Tesla and BYD will be valued in class. Do not value these companies,
The below financial statements for Tesla are given just to help you do your own modelling for your company. They're just a
Tesla Inc
TSLA 88160R101 B616C79 NASDAQ Common stock
Source: FactSet Fundamentals
DEC '11 DEC '12 DEC '13 DEC '14 DEC '15
Tesla Inc
TSLA 88160R101 B616C79 NASDAQ Common stock
Source: FactSet Fundamentals
DEC '11 DEC '12 DEC '13 DEC '14 DEC '15
Assets
Cash & Short-Term Investments 304 221 849 1,924 1,220
Cash Only 279 221 849 1,924 1,220
Total Short Term Investments 25 0 0 0 0
Short-Term Receivables 10 27 49 227 169
Accounts Receivables, Net 10 27 49 227 169
Accounts Receivables, Gros 10 27 49 227 169
Inventories 50 269 340 954 1,278
Finished Goods 26 63 69 397 477
Work in Progress 4 25 43 56 164
Raw Materials 12 164 229 500 637
Progress Payments & Other 8 18 - - 0
Other Current Assets 9 8 28 95 125
Miscellaneous Current Assets 9 8 28 95 125
Total Current Assets 373 525 1,266 3,199 2,792
Net Property, Plant & Equipment 310 562 1,121 2,596 5,195
Property, Plant & Equipment 342 623 1,281 2,972 5,766
Buildings - 51 68 154 461
Land & Improvements 26 26 45 49 60
Machinery & Equipment - 396 322 721 2,246
Construction in Progress 227 75 76 572 693
Leases 12 - - - -
Computer Software and Eq 11 22 42 99 176
Leased Property - 13 402 850 1,791
Other Property, Plant & E 66 39 325 526 338
Operating Lease Right-of-U- - - - -
Accumulated Depreciation 32 61 160 376 571
Total Long-Term Investments 23 5 6 11 32
Other Long-Term Investments 23 5 6 11 32
Long-Term Note Receivable 0- - - -
Intangible Assets 0 14 14 0-
Goodwill 0 0 0 0 0
Other Intangible Assets 0 14 14 0-
Other Assets 8 8 10 43 75
Deferred Charges 6 6 7 36 -
Tangible Other Assets 1 2 2 8 75
Total Assets 713 1,114 2,417 5,849 8,092
Liabilities & Shareholders' Equity
Current
ST Debt & Curr. Portion LT Debt 9 55 8 632 634
Accounts Payable 56 303 304 778 916
Income Tax Payable 1 10 - - -
Other Current Liabilities 125 171 363 697 1,266
Accrued Payroll 9 16 27 54 87
Miscellaneous Current Liabi 116 155 337 643 1,179
Total Current Liabilities 191 539 675 2,107 2,816
Long-Term
Long-Term Debt 271 411 599 1,850 2,284
Long-Term Debt excl Lease 268 401 586 1,807 2,065
Capital and Operating Leas 3 10 13 44 219
Provision for Risks & Charges - 15 0 97 1,294
Deferred Tax Liabilities - - 7- -
Other Liabilities 27 24 469 825 610
Other Liabilities (excl. Def 20 15 278 533 164
Deferred Income 7 9 191 292 446
Total Liabilities 489 989 1,750 4,879 7,004
Non-Equity Reserves 0 0 0 58 0
Equity
Common Equity 224 125 667 912 1,089
Common Stock Par/Carry V 0 0 0 0 0
Additional Paid-In Capital/ 893 1,190 1,807 2,345 3,415
Retained Earnings -669 -1,066 -1,140 -1,434 -2,322
Unrealized Gain/Loss Marke 0 0 0 0 0
Other Appropriated Reserv 0 0 0 0 -4
Total Shareholders' Equity 224 125 667 912 1,089
Accumulated Minority Interest 0 0 0 0 0
Total Equity 224 125 667 912 1,089
Total Liabilities & Shareholders' Equity 713 1,114 2,417 5,849 8,092
Per Share
Book Value per Share 0.43 0.22 1.08 1.45 1.66
Tangible Book Value per Share 0.43 0.19 1.06 1.45 1.66
All figures in millions of U.S. Dollar except per share items.
Tesla Inc
TSLA 88160R101 B616C79 NASDAQ Common stock
Source: FactSet Fundamentals
DEC '11 DEC '12 DEC '13 DEC '14 DEC '15
Operating Activities
Net Income / Starting Line -254.4 -396.2 -74.0 -294.0 -888.7
Depreciation, Depletion & Amortizat 16.9 28.8 106.1 231.9 422.6
Depreciation and Depletion 16.9 28.8 103.3 228.9 422.6
Amortization of Intangible Assets - - 2.8 3.0 -
Other Funds 34.2 58.5 133.9 261.6 434.9
Funds from Operations -203.3 -308.9 166.0 199.5 -31.2
Changes in Working Capital 88.9 42.8 92.0 -256.8 -493.3
Receivables -2.8 -17.3 -21.9 -183.7 46.3
Inventories -13.6 - -463.3 -1,050.3 -1,573.9
Accounts Payable 31.9 187.8 -0.2 252.8 263.3
Other Accruals 12.3 9.6 66.6 162.1 -
Other Assets/Liabilities 61.2 -137.3 510.9 562.2 771.0
Net Operating Cash Flow -114.4 -266.1 258.0 -57.3 -524.5
Investing Activities
Capital Expenditures -197.9 -239.2 -264.2 -969.9 -1,634.9
Capital Expenditures (Fixed Assets) -197.9 -239.2 -264.2 -969.9 -1,634.9
Capital Expenditures (Other Assets) 0.0 - - - -
Net Assets from Acquisitions 0.0 0.0 - - -12.3
Sale of Fixed Assets & Businesses 0.0 0.0 - - -
Purchase/Sale of Investments -25.0 23.7 0.0 -16.7 -26.4
Purchase of Investments 65.0 16.3 0.0 205.8 26.4
Sale/Maturity of Investments 40.0 40.0 0.0 189.1 0.0
Other Funds 46.9 8.6 14.8 -3.8 0.0
Other Uses -3.2 0.0 0.0 -3.8 0.0
Other Sources 50.1 8.6 14.8 0.0 0.0
Net Investing Cash Flow -175.9 -206.9 -249.4 -990.4 -1,673.6
Financing Activities
Dividends paid to stockholders (shou 0 0 0 0 0
Change in Capital Stock 242 246 631 490 857
Repurchase of Common & Preferred St 0 0 0 0 0
Sale of Common & Preferred 242 246 631 490 857
Proceeds from Sale of Stoc 231 221 415 0 750
Proceeds from Stock Optio 11 25 216 490 107
Issuance/Reduction of Debt, Net 204 173 22 1,685 684
Change in Long-Term Debt 204 173 22 1,685 684
Issuance of Long-Term Deb 204 189 660 2,300 888
Reduction in Long-Term De 0 -16 -638 -615 -204
Other Funds - 0 -17 -32 -17
Other Uses - 0 -17 -35 -17
Other Sources - 0 0 3 0
Net Financing Cash Flow 446 420 635 2,143 1,524
All Activities
Exchange Rate Effect - 0 0 -36 -34
Net Change in Cash 156 -53 644 1,060 -709
Free Cash Flow -312 -505 -6 -1,027 -2,159
Free Cash Flow per Share -1 -1 0 -2 -3
Free Cash Flow Yield (%) -10.9 -13.9 0.0 -3.7 -7.0
All figures in millions of U.S. Dollar except per share items.
FactSet's idea of Free Cash Flow appears to be -312.3 -505.3 -6.2 -1,027.2 -2,159.3
31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23
-4 -3 -2 -1 0 1 2 3
Historical Historical Historical Historical Historical Forecast Forecast Forecast
The presentation of these tables is based on page 16 of Canaccord's 2016 valuation of Think Childcare here. Note that this
https://www.asx.com.au/documents/research/tnk-20160321-full.pdf
Another interesting one: https://canaccordgenuity.bluematrix.com/sellside/EmailDocViewer?encrypt=a555719b
Below is a working line to find present values. It's not interesting enough to be shown in the above tables but can be used
PV(FCF)
Graph here
31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23
Graph here
Graph here
primary (LHS) and secondary (RHS) axis
31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23
Graph here
luation done in class. But make sure you replace this data with your own firm's values. All cells in this question should be formulas.
Historical Historical Historical Historical Historical Forecast Forecast Forecast
0 0 0 0 0
erest paid which might not be true for example if there are zero-coupon bond liabilities.
in the WACC or in the cash flow. This is an academic exercise just to show how interest tax shields can be valued differently and exact
nstant so all future years' values are the same as the first. 0 0
er the cash flow at that time was paid. So for example, the EV at time 2 should include the PV of the cashflows from time 3 onwards, b
of interest tax shields
ratio changes.
cash flow at that time was paid. So for example, the EV at time 2 should include the PV of the cashflows from time 3 onwards, but it s
Graph here
ing formulas will not work which will result in a mark of zero. Start again by re-downloading this spreadsheet and refill your answer
our company. They're just a guide and you should start again using your firm's financial data to make your own changes according to y
0 0 0 0 0
1,866 712 296 1,285 12,686
0 0 0 0 0
1,866 712 296 1,285 12,686
1,702 400 0 848 12,269
164 312 296 437 417
1,718 3,386 89 798 -2,494
1,718 3,386 89 798 -2,494
3,623 7,649 6,176 10,669 9,707
-1,904 -4,264 -6,087 -9,871 -12,201
-41 -473 -248 -833 -243
-41 -760 -248 -833 -243
- 287 0 0-
3,542 3,625 137 1,250 9,949
-7 39 -23 8 334
2,196 -25 311 2,506 13,118
-1,564 -4,142 -222 973 2,711
-2 -5 0 1 3
-5.1 -8.0 -0.4 1.3 0.4
nk Childcare here. Note that this link only opens in Firefox browser, Chrome doesn’t work for some reason.
ailDocViewer?encrypt=a555719b-412b-4cc7-8528-505c27fb1e82&mime=PDF&co=Canaccordgenuity&id=mbottomley@cgf.com&sour
4 5 6 7 8 9 10 11
31-Dec-24 31-Dec-25 31-Dec-26 31-Dec-27 31-Dec-28 31-Dec-29 31-Dec-30 31-Dec-31
he above tables but can be used to calculate the discounted FCF's over the forecast horizon, 'PV FCF (10 years)' above:
ws from time 3 onwards, but it should exclude the cash flow at time 2. Note that the EV at time 10 should be a terminal value based on
ttomley@cgf.com&source=libraryview&htmlToPdf=ture
t-pack/interest-rates.html
aph/?g=FDGh
Change this cell to say something sensible about multiples, similar to Canaccord.
If any multiples are negative, leave them blank using an empty string "". You can do this using an if function.
Report figures in the same currency and units as your firm's. SO for example with Tesla, all units are in millions of USD, so d
Interest incurred and paid are not included in the financing cash flows, despite dividends being included. See AASB107: "A
d be a terminal value based on a perpetuity cash flows starting at time 11 and growing by the growth rate of revenue in year 11.
terminal value based on a perpetuity cash flows starting at time 11 and growing by the growth rate of revenue in year 11.
Note: This cell should be W280. If it's not, you've inserted rows or columns and the auto-marking formulas will not work
This is quite an unusual account. For the forecat years this was placed in total liabilities just to help balance the balance sh
Extra line item added since Tesla had paid no dividend and therefore had no dividend account listed.
Note that neither interest expense (nor interest paid) on debt is included in the financing cash flows which is a little odd sin
https://www.accountingcoach.com/blog/interest-paid-cash-flows-statement#:~:text=In%20the%20statement%20of%20ca
https://rsmus.com/pdf/us_gaap_ifrs_cash_flows.pdf
rmulas will not work which will result in a mark of zero. Start again by re-downloading this spreadsheet and refill your answers care
e in millions of USD, so details of comparable firms such as Toyota should be reported in USD millions rather than JPY trillions.
uded. See AASB107: "A single transaction may include cash flows that are classified differently. For example, when the cash repaymen
venue in year 11.
in year 11.
formulas will not work which will result in a mark of zero. Start again by re-downloading this spreadsheet and refill your answers ca
balance the balance sheet, though for the past data this is not the case.
s which is a little odd since dividends on equity are included.
0statement%20of%20cash,in%20the%20corporation's%20net%20income.
refill your answers carefully.
an JPY trillions.
hen the cash repayment of a loan includes both interest and capital, the interest element may be classified as an operating activity and
nd refill your answers carefully.
an operating activity and the capital element is classified as a financing activity." Page 11, https://www.aasb.gov.au/admin/file/conten
v.au/admin/file/content105/c9/AASB107_07-04_COMPjul07_07-07.pdf