Professional Documents
Culture Documents
* CASE
Selected Case
Selected Case #
Projection Period (yrs)
Mid-Year Convention?
Management
1
10 >Not yet functional
N
31-Dec-2011
CAGR
31-Dec-2012
31-Dec-2013
Year 1
31-Dec-2014
2011-2013
EBITDA
EBIT
Provision for Taxes at Assumed Tax Rate
EBIAT
$
$
$
$
52.80
26.40
9.24
17.16
Plus: Depreciation
Plus: Amortization
Less: Replacement Capex
Less: Change in Net Working Capital
$
$
$
$
13.20
13.20
(26.40)
-
17.16
1.0
0.93
15.99
WACC
Discount Period
Discount Factor
Present Value of Free Cash Flow
7.32%
* ENTERPRISE VALUE
(USD in Millions)
ENTERPRISE VALUE
EXIT MULTIPLE METHOD
Exit Multiple
EQUITY VALUE
PERPETUITY GROWTH METHOD
7.0x Terminal Growth Rate
3.0%
Enterprise Value
Less: Total Debt
Less: Preferred Securities
Less: Noncontrolling Interest
Plus: Cash & Equivalents
40.46
Terminal Value
964.73
PV of Terminal Value
Cumulative PV of FCF
$
$
$
$
475.99
179.11
Enterprise Value
655.10
Year 2
31-Dec-2015
Year 3
31-Dec-2016
Projection Period
Year 5
Year 6
31-Dec-2018
31-Dec-2019
Year 4
31-Dec-2017
Year 7
31-Dec-2020
Year 8
31-Dec-2021
Year 9
31-Dec-2022
$
$
$
$
58.08
29.04
10.16
18.88
$
$
$
$
63.89
31.94
11.18
20.76
$
$
$
$
70.28
35.14
12.30
22.84
$
$
$
$
77.30
38.65
13.53
25.12
$
$
$
$
85.03
42.52
14.88
27.64
$
$
$
$
93.54
46.77
16.37
30.40
$
$
$
$
102.89
51.45
18.01
33.44
$
$
$
$
113.18
56.59
19.81
36.78
$
$
$
$
14.52
14.52
(29.04)
-
$
$
$
$
15.97
15.97
(31.94)
-
$
$
$
$
17.57
17.57
(35.14)
-
$
$
$
$
19.33
19.33
(38.65)
-
$
$
$
$
21.26
21.26
(42.52)
-
$
$
$
$
23.38
23.38
(46.77)
-
$
$
$
$
25.72
25.72
(51.45)
-
$
$
$
$
28.30
28.30
(56.59)
-
18.88 $
20.76 $
22.84 $
25.12 $
27.64 $
30.40 $
33.44 $
36.78
2.0
0.87
16.39 $
3.0
0.81
16.80 $
4.0
0.75
17.22 $
5.0
0.70
17.65 $
6.0
0.65
18.09 $
7.0
0.61
18.54 $
8.0
0.57
19.00 $
9.0
0.53
19.48
EMM
609.11 $
$
$
$
$
$
$
$
$
609.11 $
PGM
655.10
655.10
CAGR
Year 10
31-Dec-2023
$
$
$
$
124.50
62.25
21.79
40.46
$
$
$
$
31.12
31.12
(62.25)
-
40.46
10.0
0.49
19.96
2014-2023
31-Dec-2011
CAGR
31-Dec-2012
31-Dec-2013
$
$
100.00
100.00
$
$
110.00
110.00
$
$
120.00
120.00
$
$
$
$
$
$
$
$
$
$
$
55.00
45.00
4.00
1.00
40.00
10.00
30.00
10.00
7.00
13.00
$
$
$
$
$
$
$
$
$
$
$
55.00
55.00
4.00
1.00
50.00
10.00
40.00
10.00
10.50
19.50
$
$
$
$
$
$
$
$
$
$
$
60.00
60.00
4.00
1.00
55.00
10.00
45.00
10.00
12.25
22.75
OPERATING METRICS
Gross Margin
EBITDA Margin
EBIT Margin
ASSUMPTIONS
Sales Growth (YoY)
Cost of Goods Sold (% of Sales)
SG&A (% of Sales)
Other Operating Expenses (% of Sales)
Depreciation (% of Sales)
Amortization (% of Sales)
Interest Expense (% of Sales)
Simple Tax Rate
Replacement Capex (% of Sales)
Year 1
31-Dec-2014
2011-2013
9.5%
15.5%
17.3%
22.5%
32.3%
$
$
132.00
132.00
$
$
$
$
$
$
$
$
$
$
$
52.80
79.20
13.20
13.20
52.80
13.20
13.20
26.40
13.20
4.62
8.58
45.0%
40.0%
30.0%
50.0%
45.5%
36.4%
50.0%
45.8%
37.5%
60.0%
40.0%
20.0%
n/a
55.0%
4.0%
1.0%
10.0%
-%
10.0%
35.0%
10.0%
50.0%
3.6%
0.9%
9.1%
-%
9.1%
35.0%
9.1%
50.0%
3.3%
0.8%
8.3%
-%
8.3%
35.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
31-Dec-2011
CAGR
31-Dec-2012
31-Dec-2013
Year 1
31-Dec-2014
2011-2013
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
-%
-%
-
-%
-
-%
-
-%
-%
-%
* WACC
(USD in Millions)
COST OF CAPITAL
TARGET CAPITAL STRUCTURE
Debt / Total Cap
Preferred / Total Cap
40.00%
10.00%
COST OF DEBT
INPUT, or
Cost of Debt
Marginal Tax Rate
After-Tax Cost of Debt
-%
7.00%
35.00%
4.55%
COST OF PREFERRED
Cost of Preferred
COST OF EQUITY
INPUT, or
Risk-Free Rate
Market Risk Premium
Size Premium
Levered Beta
Cost of Equity
WACC
INPUT, or
Calculated WACC
Selected WACC
* SHARES OUTSTANDING
UNLEVERED BETA
-%
-%
2.00%
8.00%
1.00%
1.00
11.00%
-%
7.32%
7.32%
Use?
1
1
1
MEAN
MEDIAN
Ticker
ABC
DEF
GHI
JKL
MNO
PQR
STU
VWX
YZA
BCD
RELEVERED BETA
Mean Unlevered Beta
Target Debt/Equity
Target Preferred/Equity
Target Marginal Tax Rate
Relevered Beta
Company
Company ABC
Company DEF
Company GHI
Company JKL
Company MNO
Company PQR
Company STU
Company VWX
Company YZA
Company BCD
0.51
80.00%
20.00%
35.00%
0.88
Year 2
31-Dec-2015
Year 3
31-Dec-2016
Projection Period
Year 5
Year 6
31-Dec-2018
31-Dec-2019
Year 4
31-Dec-2017
Year 7
31-Dec-2020
Year 8
31-Dec-2021
Year 9
31-Dec-2022
$
$
145.20
145.20
$
$
159.72
159.72
$
$
175.69
175.69
$
$
193.26
193.26
$
$
212.59
212.59
$
$
233.85
233.85
$
$
257.23
257.23
$
$
282.95
282.95
$
$
$
$
$
$
$
$
$
$
$
58.08
87.12
14.52
14.52
58.08
14.52
14.52
29.04
14.52
5.08
9.44
$
$
$
$
$
$
$
$
$
$
$
63.89
95.83
15.97
15.97
63.89
15.97
15.97
31.94
15.97
5.59
10.38
$
$
$
$
$
$
$
$
$
$
$
70.28
105.42
17.57
17.57
70.28
17.57
17.57
35.14
17.57
6.15
11.42
$
$
$
$
$
$
$
$
$
$
$
77.30
115.96
19.33
19.33
77.30
19.33
19.33
38.65
19.33
6.76
12.56
$
$
$
$
$
$
$
$
$
$
$
85.03
127.55
21.26
21.26
85.03
21.26
21.26
42.52
21.26
7.44
13.82
$
$
$
$
$
$
$
$
$
$
$
93.54
140.31
23.38
23.38
93.54
23.38
23.38
46.77
23.38
8.18
15.20
$
$
$
$
$
$
$
$
$
$
$
102.89
154.34
25.72
25.72
102.89
25.72
25.72
51.45
25.72
9.00
16.72
$
$
$
$
$
$
$
$
$
$
$
113.18
169.77
28.30
28.30
113.18
28.30
28.30
56.59
28.30
9.90
18.39
60.0%
40.0%
20.0%
60.0%
40.0%
20.0%
60.0%
40.0%
20.0%
60.0%
40.0%
20.0%
60.0%
40.0%
20.0%
60.0%
40.0%
20.0%
60.0%
40.0%
20.0%
60.0%
40.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
Year 2
31-Dec-2015
Year 3
31-Dec-2016
Projection Period
Year 5
Year 6
31-Dec-2018
31-Dec-2019
Year 4
31-Dec-2017
Year 7
31-Dec-2020
Year 8
31-Dec-2021
Year 9
31-Dec-2022
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
-%
-
-%
-
-%
-
-%
-
-%
-
-%
-
-%
-
-%
-
-%
-%
-%
-%
-%
-%
Predicted
Levered Beta
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
-%
-%
-%
-%
-%
-%
-%
-%
-%
Market Value
of Debt
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
Market Value
of Preferred
$
300.00
$
300.00
$
300.00
$
300.00
$
300.00
$
300.00
$
300.00
$
300.00
$
300.00
$
300.00
Market Value
of Equity
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
1,000.00
$
$
$
$
$
$
1,000.00
1,000.00
300.00
300.00
1,000.00
1,000.00
-%
-%
-%
Marginal
Tax Rate
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%
-%
-%
-%
-%
-%
-%
Debt/
Equity
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-%
100.00%
100.00%
CAGR
Year 10
31-Dec-2023
$
$
311.25
311.25
$
$
$
$
$
$
$
$
$
$
$
124.50
186.75
31.12
31.12
124.50
31.12
31.12
62.25
31.12
10.89
20.23
2014-2023
10.0%
10.0%
10.0%
10.0%
10.0%
60.0%
40.0%
20.0%
10.0%
40.0%
10.0%
10.0%
10.0%
10.0%
10.0%
35.0%
20.0%
CAGR
Year 10
31-Dec-2023
$
$
$
$
$
$
$
$
-%
-
2014-2023
-%
-%
-%
Preferred/
Equity
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
-%
30.00%
30.00%
Unlevered
Beta
0.51
0.51
0.51
0.51
0.51
0.51
0.51
0.51
0.51
0.51
0.51
0.51
NOTES
Company XYZ
DCF Template
Andrew Wang
9-Apr-2014
31-Dec-2014
Millions
31-Dec-2011
n/a
31-Dec-2012
10.0%
31-Dec-2013
9.1%
Year 1
31-Dec-2014
10.0%
10.0%
20.0%
25.0%
5.0%
-%
Year 2
31-Dec-2015
10.0%
10.0%
20.0%
25.0%
5.0%
-%
55.0%
50.0%
50.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
SG&A (% of Sales)
Management
Base
Upside
Downside
Severe Downside
4.0%
3.6%
3.3%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
1.0%
0.9%
0.8%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
Depreciation (% of Sales)
Management
Base
Upside
Downside
Severe Downside
10.0%
9.1%
8.3%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
Amortization (% of Sales)
Management
Base
Upside
Downside
Severe Downside
-%
-%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
9.1%
8.3%
10.0%
10.0%
10.0%
10.0%
Base
Upside
Downside
Severe Downside
Simple Tax Rate
Management
Base
Upside
Downside
Severe Downside
35.0%
35.0%
35.0%
20.0%
25.0%
5.0%
-%
20.0%
25.0%
5.0%
-%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
31-Dec-2011
-%
31-Dec-2012
-%
31-Dec-2013
-%
Year 1
31-Dec-2014
20.0%
20.0%
20.0%
20.0%
15.0%
10.0%
Year 2
31-Dec-2015
20.0%
20.0%
20.0%
20.0%
15.0%
10.0%
Year 1
31-Dec-2014
Year 2
31-Dec-2015
31-Dec-2012
31-Dec-2013
CURRENT ASSETS
Days Sales Oustanding (DSO)
Management
Base
Upside
Downside
Severe Downside
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
CURRENT LIABILITIES
Days Payable Outstanding (DPO)
Management
Base
Upside
Downside
Severe Downside
-%
-%
-%
-%
Base
Upside
Downside
Severe Downside
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
Year 3
31-Dec-2016
10.0%
10.0%
20.0%
25.0%
5.0%
-%
Year 4
31-Dec-2017
10.0%
10.0%
20.0%
25.0%
5.0%
-%
Projection Period
Year 5
Year 6
31-Dec-2018
31-Dec-2019
10.0%
10.0%
10.0%
10.0%
20.0%
20.0%
25.0%
25.0%
5.0%
5.0%
-%
-%
Year 7
31-Dec-2020
10.0%
10.0%
20.0%
25.0%
5.0%
-%
Year 8
31-Dec-2021
10.0%
10.0%
20.0%
25.0%
5.0%
-%
Year 9
31-Dec-2022
10.0%
10.0%
20.0%
25.0%
5.0%
-%
Year 10
31-Dec-2023
10.0%
10.0%
20.0%
25.0%
5.0%
-%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
40.0%
40.0%
40.0%
40.0%
50.0%
60.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
10.0%
10.0%
20.0%
30.0%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
20.0%
25.0%
5.0%
-%
20.0%
25.0%
5.0%
-%
20.0%
25.0%
5.0%
-%
20.0%
25.0%
5.0%
-%
20.0%
25.0%
5.0%
-%
20.0%
25.0%
5.0%
-%
20.0%
25.0%
5.0%
-%
20.0%
25.0%
5.0%
-%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
35.0%
Year 3
31-Dec-2016
20.0%
20.0%
20.0%
20.0%
15.0%
10.0%
Year 4
31-Dec-2017
20.0%
20.0%
20.0%
20.0%
15.0%
10.0%
Projection Period
Year 5
Year 6
31-Dec-2018
31-Dec-2019
20.0%
20.0%
20.0%
20.0%
20.0%
20.0%
20.0%
20.0%
15.0%
15.0%
10.0%
10.0%
Year 7
31-Dec-2020
20.0%
20.0%
20.0%
20.0%
15.0%
10.0%
Year 8
31-Dec-2021
20.0%
20.0%
20.0%
20.0%
15.0%
10.0%
Year 9
31-Dec-2022
20.0%
20.0%
20.0%
20.0%
15.0%
10.0%
Year 10
31-Dec-2023
20.0%
20.0%
20.0%
20.0%
15.0%
10.0%
Year 3
31-Dec-2016
Year 4
31-Dec-2017
Projection Period
Year 5
Year 6
31-Dec-2018
31-Dec-2019
Year 7
31-Dec-2020
Year 8
31-Dec-2021
Year 9
31-Dec-2022
Year 10
31-Dec-2023
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%