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a Happy Times Debt value 130 YTM 10.00 Mark.pdf

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a Happy Times Debt value 130 YTM 10.00% Market Cap 350.00 Return on equity 15% Joe\'s Debt 30.00 EBIT 17.00 Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value 233.98 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT- Depreciation) 16.15 17.28 18.49 19.78 255.15 Tax 5.65 6.05 6.47 6.92 89.30 PAT 10.50 11.23 12.02 12.86 165.85 Net cash flow 8.29 8.87 9.49 10.15 162.95 PV of Cash flows 106.97 Market value of debt 30 EV of Joe 136.97 Shares outstanding 2.3 Maximum share price 59.55 (EV/Shares outstanding) b Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value (Using EV/EBIDTA of 9) 210.58 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT-Depreciation) 16.15 17.28 18.49 19.78 231.75 Tax 5.65 6.05 6.47 6.92 81.11 PAT 10.50 11.23 12.02 12.86 150.64 Net cash flow 8.29 8.87 9.49 10.15 147.74 PV of Cash flows 99.41 Market value of debt 30 EV of Joe 129.41 Shares outstanding 2.3 Maximum share price 56.26 (EV/Shares outstanding) Solution a Happy Times Debt value 130 YTM 10.00% Market Cap 350.00 Return on equity 15% Joe\'s Debt 30.00 EBIT 17.00 Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value 233.98 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT- Depreciation) 16.15 17.28 18.49 19.78 255.15 Tax 5.65 6.05 6.47 6.92 89.30 PAT 10.50 11.23 12.02 12.86 165.85 Net cash flow 8.29 8.87 9.49 10.15 162.95 PV of Cash flows 106.97 Market value of debt 30 EV of Joe 136.97 Shares outstanding 2.3 Maximum share price 59.55 (EV/Shares outstanding) b Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value (Using EV/EBIDTA of 9) 210.58 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT-Depreciation) 16.15 17.28 18.49 19.78 231.75 Tax 5.65 6.05 6.47 6.92 81.11 PAT 10.50 11.23 12.02 12.86 150.64 Net cash flow 8.29 8.87 9.49 10.15 147.74 PV of Cash flows 99.41 Market value of debt 30 EV of Joe 129.41 Shares outstanding 2.3 Maximum share price 56.26 (EV/Shares outstanding).

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a Happy Times Debt value 130 YTM 10.00% Market Cap 350.00 Return on equity 15% Joe's Debt 30.00 EBIT 17.00 Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value 233.98 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT- Depreciation) 16.15 17.28 18.49 19.78 255.15 Tax 5.65 6.05 6.47 6.92 89.30 PAT 10.50 11.23 12.02 12.86 165.85 Net cash flow 8.29 8.87 9.49 10.15 162.95 PV of Cash flows 106.97 Market value of debt 30 EV of Joe 136.97 Shares outstanding 2.3 Maximum share price 59.55 (EV/Shares outstanding) b Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value (Using EV/EBIDTA of 9) 210.58 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT-Depreciation) 16.15 17.28 18.49 19.78 231.75 Tax 5.65 6.05 6.47 6.92 81.11 PAT 10.50 11.23 12.02 12.86 150.64 Net cash flow 8.29 8.87 9.49 10.15 147.74 PV of Cash flows 99.41 Market value of debt 30 EV of Joe 129.41 Shares outstanding 2.3 Maximum share price 56.26 (EV/Shares outstanding) Solution a Happy Times Debt value 130 YTM 10.00% Market Cap 350.00 Return on equity 15% Joe's Debt 30.00 EBIT 17.00 Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value 233.98 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT- Depreciation) 16.15 17.28 18.49 19.78 255.15 Tax 5.65 6.05 6.47 6.92 89.30 PAT 10.50 11.23 12.02 12.86 165.85 Net cash flow 8.29 8.87 9.49 10.15 162.95 PV of Cash flows 106.97 Market value of debt 30 EV of Joe 136.97 Shares outstanding 2.3 Maximum share price 59.55 (EV/Shares outstanding) b Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value (Using EV/EBIDTA of 9) 210.58 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT-Depreciation) 16.15 17.28 18.49 19.78 231.75 Tax 5.65 6.05 6.47 6.92 81.11 PAT 10.50 11.23 12.02 12.86 150.64 Net cash flow 8.29 8.87 9.49 10.15
147.74 PV of Cash flows 99.41 Market value of debt 30 EV of Joe 129.41 Shares outstanding 2.3 Maximum share price 56.26 (EV/Shares outstanding)

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  • 1. a Happy Times Debt value 130 YTM 10.00% Market Cap 350.00 Return on equity 15% Joe's Debt 30.00 EBIT 17.00 Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value 233.98 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT- Depreciation) 16.15 17.28 18.49 19.78 255.15 Tax 5.65 6.05 6.47 6.92 89.30 PAT 10.50 11.23 12.02 12.86 165.85 Net cash flow 8.29 8.87 9.49 10.15 162.95 PV of Cash flows 106.97 Market value of debt 30 EV of Joe 136.97 Shares outstanding 2.3 Maximum share price 59.55 (EV/Shares outstanding) b Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value (Using EV/EBIDTA of 9) 210.58 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT-Depreciation) 16.15 17.28 18.49 19.78 231.75 Tax 5.65 6.05 6.47 6.92 81.11 PAT 10.50 11.23 12.02 12.86 150.64 Net cash flow 8.29 8.87 9.49 10.15 147.74 PV of Cash flows 99.41 Market value of debt 30 EV of Joe 129.41 Shares outstanding 2.3 Maximum share price 56.26 (EV/Shares outstanding) Solution a Happy Times Debt value 130 YTM 10.00% Market Cap 350.00 Return on equity 15% Joe's Debt 30.00 EBIT 17.00 Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value 233.98 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT- Depreciation) 16.15 17.28 18.49 19.78 255.15 Tax 5.65 6.05 6.47 6.92 89.30 PAT 10.50 11.23 12.02 12.86 165.85 Net cash flow 8.29 8.87 9.49 10.15 162.95 PV of Cash flows 106.97 Market value of debt 30 EV of Joe 136.97 Shares outstanding 2.3 Maximum share price 59.55 (EV/Shares outstanding) b Year 1.00 2 3 4 5 EBIT(Growth rate 7%) 17.00 18.19 19.46 20.83 22.28 Terminal value (Using EV/EBIDTA of 9) 210.58 Terminal value is calculated using the formula - Year 5 Cash flow*(1+Growth rate)/(ROE-Growth rate) Net working capital(6% of EBIT) 1.02 1.09 1.17 1.25 1.34 Capex(12% of EBIT) 2.04 2.18 2.34 2.50 2.67 Depreciation(5% of EBIT) 0.85 0.91 0.97 1.04 1.11 Profit before tax(EBIT-Depreciation) 16.15 17.28 18.49 19.78 231.75 Tax 5.65 6.05 6.47 6.92 81.11 PAT 10.50 11.23 12.02 12.86 150.64 Net cash flow 8.29 8.87 9.49 10.15
  • 2. 147.74 PV of Cash flows 99.41 Market value of debt 30 EV of Joe 129.41 Shares outstanding 2.3 Maximum share price 56.26 (EV/Shares outstanding)