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Financial Analysis and Valuation Metrics

The document presents financial data for two years, highlighting sales growth, operating profit, and capital investments. It calculates free cash flow, continuing value, and shareholder value, showing a corporate value increase from 8,305.93 to 8,803.57. The strategic value per share is projected to rise from 7.11 to 7.60.

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isantos
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5 views2 pages

Financial Analysis and Valuation Metrics

The document presents financial data for two years, highlighting sales growth, operating profit, and capital investments. It calculates free cash flow, continuing value, and shareholder value, showing a corporate value increase from 8,305.93 to 8,803.57. The strategic value per share is projected to rise from 7.11 to 7.60.

Uploaded by

isantos
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

20X1 20X2 Growth

Sales 4,500.00 4,950.00 10% 450.00


COGS & Expenses (3,616.00) (3,960.00) 10% (344.00)
Operating Profit 884.00 990.00 12% 106.00
Fixed capital 1,800.00 1,900.00 6% 100.00 22%
Working Capital 1,500.00 1,650.00 10% 150.00 33%
Marketable Securities 500.00 393.00 -21% (170.00)
Ext Debt &Obligation (@ Book Value) 900.00 1,000.00 11% 100.00
Ext Debt & Obligation (@Market Value) 1,000.00 1,200.00 20% 200.00
Capital and Reserves (@ Book Value) 2,900.00 2,940.00 1% 40.00
Number of shares issued 985.00 1,000.00 2% 15.00
Share price per share 2.70 2.60 -4% 0.00

REQUIRED 1

Calculate the value driver

Sales in the most recent period 4,950.00


Sales growth rate 10%
Operating profit margin 20%
Cash tax rate 40%
Fixed capital investment 22% Return ratio based on increasing
Working capital investment 33% sales
Cost of Capital 8%
Planning period (years) 2

REQUIRED 2

Calculate the Free Cash Flow

Year 1 Year 2
Sales growth 5,445.00 5,990.00
Operating Profit 1,089.00 1,198.00
0.60 0.06
Add: Current after tax cash flow 594.00 653.40
After tax cash flow in planning year 59.40 65.34
Fixed capital investment (110.00) (121.00)
Working capital investment (165.00) (181.50)
Free Cash Flow 378.40 416.24
Multiply by: Discount Factor 0.92593 0.85743
Present value of cash flow 350.372 356.897

Continuing Value:
Add: Current after tax cash flow 594.00 653.40
Add: After tax cash flow in planning year 59.40 65.34
After tax Cash Flow prior to Investment 653.40 718.74
Divide: Cost of Capital 8% 8%
Continuing Value at end of each year 8,167.50 8,984.25
Multiply by: Discount factor 0.92593 0.85743
Present Value of Continuing Value 7,562.53 7,703.37

REQUIRED 3

Shareholder value

Cumulative PV of cash flow 350.4 707.2


Add: Present value of continuing value 7,562.53 7,703.37
Business values for each planning period 7,912.93 8,410.57
Add: Marketable securities 393.00 393.00
Corporate Value 8,305.93 8,803.57
Less: Ext Debt & Obligations (@ Market value) 1,200.00 1,200.00
Value to shareholders 7,105.93 7,603.57

Book value per share 2.94 2.94


Market value per share 2.60 2.60
Strategic value per share 7.11 7.60

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