![]() Net Working Capital cash flow is calculated as follows: Net Working Capital = Net Working Capital over Sales * Net Sales From Year 1 onwards, it is calculated as a function over Net Sales as follows: The Net Working Capital at Year 0 can be entered directly into the spreadsheet. The Net Working Capital and Investment (Capital Spending) are taken into account in these two sections. ![]() Net Working Capital and Investment (Capital Spending) The reason for multiplying the Interest with (1- Tax Rate) is because Interest can be used as a Tax Shield. Net Debt = New Debt Issued - Interest * (1 - Tax Rate) - Existing Debt Principal Repayments The Earnings before Interest & Taxes (EBIT) is calculated as follows:Įarnings before Interest & Taxes(EBIT) = Net Sales - Total Variable Costs - Total Fixed Costs - Depreciation Number of Common Shares - The equity value will be divided by the number of common shares to determine the price per share.The equity value can be derived by adding the value of the Non Operating Assets from the value of the operating assets. Value of Non Operating Assets - The Discounted value of the Free Cash Flow to Equity yields the value of the operating assets.This growth rate is used in the estimation of the Terminal Value of the company. ![]()
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