Top & Rising Company Joint Venture Financial Analysis

Last Modified:

1. How do you pay back the STF? Is the cash flow missing the item of STF?

10/2/2016

TOP & RISING JOINT VENTURE

$ (All in SGD'000)
Background Information
PARENT COMPANY
Rising Company
Top Gun Company

Net Worth ($)

$20,000
$50,000

TOP & RISING COMPANY/ JV

Capital Contribution
Rising Company
Top Gun Company

Share Percent
70%
30%

Capital Requirement
Building
Plant & Machinery
Other Fixed Assets

Cost ($)
$8,000
$10,000
$2,000

Capital Structure
Shareholder Equity ($)
Equity ($)
Loan ($)
Total Shareholder Equity
Debt Obligations ($)
STF ($)
Term Loan ($)

$6,000
$14,000

OTHER FIGURES
Tax Rate
Loan Interest Rate
Repayment Period
5th Year Capacity Used

0%
7%
5 years
70%

$3,000
$3,500
$6,500

Sales($)
$50,000
$100,000

Useful Life
50 years
10 years
5 years

After-tax Profit ($)

$3,000
$7,000

Location
Singapore
Japan

Main Business
Manufacturing Plastic Containers
Edible oil and fat processing

Year
P&L (SGD'000, Year Ending)
Sales

0
Dec-X4
-

1
Dec-X5
$15,000

2
Dec-X6
$17,500

3
Dec-X7
$20,000

4
Dec-X8
$25,000

5
Dec-X9
$30,000

6
Dec-X10
$32,571

7
Dec-X11
$35,143

8
Dec-X12
$37,714

9
Dec-X13
$40,286

10
Dec-X14
$42,857

Less: COGS

($10,500)

($12,250)

($14,000)

($17,500)

($21,000)

($22,800)

($24,600)

($26,400)

($28,200)

($30,000)

Gross Profit

$4,500

$5,250

$6,000

$7,500

$9,000

$9,771

$10,543

$11,314

$12,086

$12,857

Less: SG&A

($1,500)

($1,750)

($2,000)

($2,500)

($3,000)

($3,257)

($3,514)

($3,771)

($4,029)

($4,286)

EBITDA

$3,000

$3,500

$4,000

$5,000

$6,000

$6,514

$7,029

$7,543

$8,057

$8,571

Less: D&A

($1,560)

($1,560)

($1,560)

($1,560)

($1,560)

($1,560)

($1,560)

($1,560)

($1,560)

($1,560)

EBIT

$1,440

$1,940

$2,440

$3,440

$4,440

$4,954

$5,469

$5,983

$6,497

$7,011

Less: Interest expenses - ST

$254

$296

$338

$420

$420

$420

$420

$420

$420

$420

Less: Interest expenses - TL

($490.00)

($980.00)

($980.00)

($784.00)

($588.00)

($392.00)

($196.00)

EBT

($490.00)

$714

$1,256

$1,994

$3,272

$4,468

$5,178

$5,889

$6,403

$6,917

$7,431

Less: Taxes
Net Profit

($490.00)

$714

$1,256

$1,994

$3,272

$4,468

$5,178

$5,889

$6,403

$6,917

$7,431

Year
NWC Requirement (SGD'000, Year Ending)
Projected Stocks
2 months raw material

0
Dec-X4

1
Dec-X5
$3,000

2
Dec-X6
$3,500

3
Dec-X7
$4,000

4
Dec-X8
$5,000

5
Dec-X9
$6,000

6
Dec-X10
$6,514

7
Dec-X11
$7,029

8
Dec-X12
$7,543

9
Dec-X13
$8,057

10
Dec-X14
$8,571

$1,000

$1,167

$1,333

$1,667

$2,000

$2,171

$2,343

$2,514

$2,686

$2,857

$688

$802

$917

$1,146

$1,375

$1,493

$1,611

$1,729

$1,846

$1,964

1.5 months finished goods

$1,313

$1,531

$1,750

$2,188

$2,625

$2,850

$3,075

$3,300

$3,525

$3,750

Add: Projected Debtors - 2months

$2,000

$2,333

$2,667

$3,333

$4,000

$4,343

$4,686

$5,029

$5,371

$5,714

($1,000)

($1,167)

($1,333)

($1,667)

($2,000)

($2,171)

($2,343)

($2,514)

($2,686)

($2,857)

1 month WIP

Less: Projected creditors - 2 months

Less: Projected accurals - 1 months

($375)

($438)

($500)

($625)

($750)

($814)

($879)

($943)

($1,007)

($1,071)

NWC Requirement

$3,625

$4,229

$4,833

$6,042

$7,250

$7,871

$8,493

$9,114

$9,736

$10,357

Incremental NWC

$3,625

$604

$604

$1,208

$1,208

$621

$621

$621

$621

$621

Year
Debt (SGD'000, Year Ending)

1
Dec-X5

2
Dec-X6

3
Dec-X7

4
Dec-X8

5
Dec-X9

6
Dec-X10

7
Dec-X11

8
Dec-X12

9
Dec-X13

10
Dec-X14

$14,000

$14,000

$14,000

$11,200

$8,400

$5,600

$2,800

(2,800)

(2,800)

(2,800)

(2,800)

(2,800)

Ending Balance

$14,000

$14,000

$11,200

$8,400

$5,600

$2,800

Interest Expense

($490.00)

($980.00)

($980.00)

($784.00)

($588.00)

($392.00)

($196)

Case Selector

0
Dec-X4
Defer

Term Loan
Beginning Balance
Less: Repayment

Year
Cash Flow (SGD'000, Year Ending)
Net Profit After Tax

0
Dec-X4
($490.00)

1
Dec-X5
$714

2
Dec-X6
$1,256

3
Dec-X7
$1,994

5
Dec-X9
$4,468

6
Dec-X10
$5,178

7
Dec-X11
$5,889

8
Dec-X12
$6,403

9
Dec-X13
$6,917

10
Dec-X14
$7,431

$1,560

$1,560

$1,560

($3,625)

($604)

($604)

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

($1,208)

($1,208)

($621)

($621)

($621)

($621)

$20,500

$3,625

$604

$604

($621)

$1,167

Capital

$3,000

Shareholders' Loan

$3,500

Bank Term Loan

$14,000

STF Drawdown

$3,625

$604

$604

$1,167

($20,000)

$0

($2,800)

($2,800)

($2,800)

($2,800)

($4,800)

($20,000)

($2,000)

$0

($2,800)

($2,800)

($2,800)

($2,800)

($2,800)

Net Cash Flow

10

2,274

16

754

1,990

2,020

1,317

6,827

7,341

7,856

8,370

Opening Cash Balance

Clsoing Cash Balance

$0
$10

$10
$2,284

$2,284
$2,300

$2,300
$3,054

$3,054
$5,044

$5,044
$7,064

$7,064
$8,381

$8,381
$15,208

$15,208
$22,550

$22,550
$30,405

$30,405
$38,775

Add: Depreciation
Less: Changes in NWC
Add: Non P&L Cash Inflows

Less: Non P&L Cash Outflows

Capital Expenditure
Term Loan Principal Repay

4
Dec-X8
$3,272

Year
BalanceSheet (SGD'000, Year Ending)
Fixed Assets
Stocks

0
Dec-X4
$20,000

1
Dec-X5
$18,440

2
Dec-X6
$16,880

3
Dec-X7
$15,320

4
Dec-X8
$13,760

5
Dec-X9
$12,200

6
Dec-X10
$12,640

7
Dec-X11
$11,080

$3,000

$3,500

$4,000

$5,000

$6,000

$6,514

$2,000

$2,333

$2,667

$3,333

$4,000

$4,343

$4,686

$5,029

$5,371

$5,714

$2,284

$2,300

$3,054

$5,044

$7,064

$8,381

$15,208

$22,550

$30,405

$38,775

$20,010

$25,724

$25,013

$25,041

$27,138

$29,264

$31,878

$38,002

$44,641

$51,794

$59,461

Share Capital

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

Shareholders' Loan

$3,500

$3,500

$3,500

$3,500

$3,500

$3,500

$3,500

$3,500

$3,500

$3,500

$3,500

Retained Earnings

($490)

$224

$1,480

$3,474

$6,746

$11,214

$16,392

$22,281

$28,684

$35,601

$43,032

$14,000

$14,000

$11,200

$8,400

$5,600

2,800

$3,625

$4,229

$4,833

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

Total Assets

$8,057

10
Dec-X14
$6,400

Cash

$7,543

9
Dec-X13
$7,960

$10

Debtors

$7,029

8
Dec-X12
$9,520

$8,571

Funded By:

Long Term Loan

Short Term Facilities
Trade Creditiors
Accurals
Total Shareholders' Equity and Liabilities
Checking if Balance

$1,000

$1,167

$1,333

$1,667

$2,000

$2,171

$2,343

$2,514

$2,686

$2,857

$20,010

$375
$25,724

$438
$25,013

$500
$25,041

$625
$27,138

$750
$29,264

$814
$31,878

$879
$38,002

$943
$44,641

$1,007
$51,794

$1,071
$59,461

Correct

Correct

Correct

Correct

Correct

Correct

Correct

Correct

Correct

Correct

Correct

Year
Valuation (SGD'000, Year Ending)
Cost of Equity

1
Dec-X5

2
Dec-X6

3
Dec-X7

4
Dec-X8

5
Dec-X9

6
Dec-X10

7
Dec-X11

8
Dec-X12

9
Dec-X13

10
Dec-X14

($490)

$714

$1,256

$1,994

$3,272

$4,468

$5,178

$5,889

$6,403

$6,917

$7,431

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

Capital Expenditure

($20,000)

($2,000)

Free Cash Flow

($20,490)

$2,274

$2,816

$3,554

$4,832

$6,028

$4,738

$7,449

$7,963

$8,477

$8,991

EBT
Depreciation

0
Dec-X4
12%

Discount Factor

1.00

0.89

0.80

0.71

0.64

0.57

0.51

0.45

0.40

0.36

0.32

Discounted FCF

($20,490)

$2,030

$2,245

$2,530

$3,071

$3,420

$2,401

$3,369

$3,216

$3,057

$2,895

Cumulative Cash Flow

($20,490)

($18,216)

-$15,400

-$11,846

-$7,014

-$986

$3,752

$11,201

$19,164

$27,641

$36,632

n/m

n/m

n/m

n/m

n/m

n/m

0.21

0.50

1.41

2.26

3.07

Fraction
IRR
NPV
Payback

5.92%
$7,744
5.21 years