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Ducati Valuation - LP

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This document contains financial information for Ducati from 1995 to 2003 including sales, cash, accounts receivable, inventory, and accounts payable. It also includes calculations of working capital, free cash flow, and valuation of the unlevered firm using the APV method. The valuation results in an enterprise value of $793.1 million in 2003 for Ducati based on projected free cash flows discounted at the weighted average cost of capital and adding the present value of tax shields.

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Ducati Valuation - LP

Uploaded by

uygh g
268 views11 pages
This document contains financial information for Ducati from 1995 to 2003 including sales, cash, accounts receivable, inventory, and accounts payable. It also includes calculations of working capital, free cash flow, and valuation of the unlevered firm using the APV method. The valuation results in an enterprise value of $793.1 million in 2003 for Ducati based on projected free cash flows discounted at the weighted average cost of capital and adding the present value of tax shields.

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This document contains financial information for Ducati from 1995 to 2003 including sales, cash, accounts receivable, inventory, and accounts payable. It also includes calculations of working capital, free cash flow, and valuation of the unlevered firm using the APV method. The valuation results in an enterprise value of $793.1 million in 2003 for Ducati based on projected free cash flows discounted at the weighted average cost of capital and adding the present value of tax shields.

Copyright:

© All Rights Reserved
Download as XLSX, PDF, TXT or read online from Scribd
Download as xlsx, pdf, or txt
268 views11 pages

Ducati Valuation - LP

Uploaded by

uygh g
This document contains financial information for Ducati from 1995 to 2003 including sales, cash, accounts receivable, inventory, and accounts payable. It also includes calculations of working capital, free cash flow, and valuation of the unlevered firm using the APV method. The valuation results in an enterprise value of $793.1 million in 2003 for Ducati based on projected free cash flows discounted at the weighted average cost of capital and adding the present value of tax shields.

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You are on page 1/ 11

Working Capital Calculations

1995 1996 1997 1998 1999 2000 2001 2002 2003

Sales (from income statement 9a) 292 199.5 383.7 475.4 543.4 602.6 646.9 688.6 733.7

Cash (from balance sheet Ex. 9c) 9.4 11.3 22.6 8.0 9.8 37.2 59.9 87.2 132.2
Cash/Sales 3.2% 5.7% 5.9% 1.7% 1.8% 6.2% 9.3% 12.7% 18.0%
Do the cash projections after 1996 look reasonable? i.e., do they reflect only what is necessary for NWC?

Other parts of NWC


Transaction cash required (calculated as 7 20.4 14.0 26.9 33.3 38.0 42.2 45.3 48.2 51.4
+AR (Ex. 9c) 80 84.5 83.2 124.5 139.9 141.6 152 161.4 170.6
AR/Sales 27.4% 42.4% 21.7% 26.2% 25.7% 23.5% 23.5% 23.4% 23.3%
Days Sales 100.0 154.6 79.1 95.6 94.0 85.8 85.8 85.6 84.9
+Inventories (Ex. 9c) 55 37.2 49.2 65.4 61.7 68.1 72.6 76.3 80.2
Inventory/Sales 18.8% 18.6% 12.8% 13.8% 11.4% 11.3% 11.2% 11.1% 10.9%
Days Sales 68.8 68.1 46.8 50.2 41.4 41.2 41.0 40.4 39.9
-AP (Ex. 9c) 40 30.3 50.4 78.7 94.4 104.1 110.9 116.6 122.6
AP/Sales 13.7% 15.2% 13.1% 16.6% 17.4% 17.3% 17.1% 16.9% 16.7%
Days Sales 50.0 55.4 47.9 60.4 63.4 63.1 62.6 61.8 61.0

Working Capital Under Existing Pro Formas


Transaction cash required (calculated) 20.4 14.0 26.9 33.3 38.0 42.2 45.3 48.2 51.4
+AR (Ex. 9c) 80 84.5 83.2 124.5 139.9 141.6 152 161.4 170.6
Risk-free rate (from Ex. 15b 6.74%
Market premuim, R_m - R_f 7.50% On the higher end
Beta (from Ex. 4) 1.09 HD has no debt, it's unlevered beta

R_0 14.92%
Ducati APV/CCF Valuation
1995 1996 1997 1998 1999 2000 2001 2002 2003

A. Value Unlevered Firm


EBIT (Ex. 9a) -5.4 58.2 79.4 96.3 111 123.3 135.2 146
-Taxes (53.5%) 0.0 31.1 42.5 51.5 59.4 66.0 72.3 78.1
EBIAT -5.4 27.1 36.9 44.8 51.6 57.3 62.9 67.9

+Depreciation (Ex. 9b) 6 7.3 9.1 11.1 13.5 15.7 18.1 20.7
+Amortization (Ex. 9b) 24.7 24.7 24.7 28.5 28.5 28.5 28.5 28.5
-Capital expenditures (Ex. 9b) 12.9 15.5 20 24 22 24 24 26
-Increase in NWC (From Sheet 'NWC') -9.3 2.9 33.4 18.0 3.4 11.7 10.9 10.8
Free Cash Flow 21.7 40.7 17.3 42.4 68.2 65.8 74.5 80.3

Capital Cash Flow = FCF + TS

Terminal Growth rate 0.05


Terminal Value 850.728
Total Free Cash Flow 21.7 40.7 17.3 42.4 68.2 65.8 74.5 931.1
Required return on assets 14.92%
Discount Factors 0.87021 0.75726 0.65898 0.57345 0.49902 0.43425 0.37789 0.32884
Discounted FCF 18.9 30.8 11.4 24.3 34.0 28.6 28.2 306.2

PV Unlevered Firm 482.3


Terminal value contribution 279.8

B. Value Interest Tax Shields


Net interest expense (Ex. 9a) 11 31.1 28.9 28.1 23.1 17.9 12.3 6.3
Interest tax shield (53.5%) 5.9 16.6 15.5 15.0 12.4 9.6 6.6 3.4
Terminal Value of TS 30.0
Cost of Debt 11.25%
Discount Factors 0.89888 0.80798 0.72627 0.65283 0.58681 0.52747 0.47413 0.42619
Discounted TS 5.29 13.44 11.23 9.81 7.25 5.05 3.12 14.21
PV Interest Tax Shields -- APV 69.4

C. Enterprise Value
APV 551.7
Ducati APV/CCF Valuation
1995 1996 1997 1998 1999 2000 2001 2002 2003

A. Value Unlevered Firm


EBIT (Ex. 9a) -5.4 58.2 79.4 96.3 111 123.3 135.2 146
-Taxes (53.5%) 0.0 31.1 42.5 51.5 59.4 66.0 72.3 78.1
EBIAT -5.4 27.1 36.9 44.8 51.6 57.3 62.9 67.9

+Depreciation (Ex. 9b) 6 7.3 9.1 11.1 13.5 15.7 18.1 20.7
+Amortization (Ex. 9b) 24.7 24.7 24.7 28.5 28.5 28.5 28.5 28.5
-Capital expenditures (Ex. 9b) 12.9 15.5 20 24 22 24 24 26
-Increase in NWC (From Sheet 'NWC') -9.3 2.9 33.4 18.0 3.4 11.7 10.9 10.8
Free Cash Flow 21.7 40.7 17.3 42.4 68.2 65.8 74.5 80.3

Capital Cash Flow = FCF + TS

Terminal Growth rate 0.05


Terminal Value (2.162003 Sales Ex. 9a, Ex. 4 (HD multiple) 1584.8
Total Free Cash Flow 21.7 40.7 17.3 42.4 68.2 65.8 74.5 1665.1
Required return on assets 14.92%
Discount Factors 0.87021 0.75726 0.65898 0.57345 0.49902 0.43425 0.37789 0.32884
Discounted FCF 18.9 30.8 11.4 24.3 34.0 28.6 28.2 547.6

PV Unlevered Firm 723.7


Terminal value contribution 521.1

B. Value Interest Tax Shields


Net interest expense (Ex. 9a) 11 31.1 28.9 28.1 23.1 17.9 12.3 6.3
Interest tax shield (53.5%) 5.9 16.6 15.5 15.0 12.4 9.6 6.6 3.4
Terminal Value of TS 30.0
Cost of Debt 11.25%
Discount Factors 0.89888 0.80798 0.72627 0.65283 0.58681 0.52747 0.47413 0.42619
Discounted TS 5.29 13.44 11.23 9.81 7.25 5.05 3.12 14.21
PV Interest Tax Shields -- APV 69.4

C. Enterprise Value
APV 793.1
Ducati APV/CCF Valuation
1995 1996 1997 1998 1999 2000 2001 2002 2003

A. Value Unlevered Firm


EBIT (Ex. 9a) -5.4 58.2 79.4 96.3 111 123.3 135.2 146
-Taxes (53.5%) 0.0 31.1 42.5 51.5 59.4 66.0 72.3 78.1
EBIAT -5.4 27.1 36.9 44.8 51.6 57.3 62.9 67.9

+Depreciation (Ex. 9b) 6 7.3 9.1 11.1 13.5 15.7 18.1 20.7
+Amortization (Ex. 9b) 24.7 24.7 24.7 28.5 28.5 28.5 28.5 28.5
-Capital expenditures (Ex. 9b) 12.9 15.5 20 24 22 24 24 26
-Increase in NWC (From Sheet 'NWC') -9.3 2.9 33.4 18.0 3.4 11.7 10.9 10.8
Free Cash Flow 21.7 40.7 17.3 42.4 68.2 65.8 74.5 80.3

Capital Cash Flow = FCF + TS 27.6 57.3 32.8 57.5 80.5 75.4 81.1 83.7

Terminal Growth rate 0.05


Terminal Value 886.421
Total Free Cash Flow 27.6 57.3 32.8 57.5 80.5 75.4 81.1 970.1
Required return on assets 14.92%
Discount Factors 0.87021 0.75726 0.65898 0.57345 0.49902 0.43425 0.37789 0.32884
Discounted FCF 24.0 43.4 21.6 32.9 40.2 32.7 30.7 319.0

PV of Levered Firm 544.5


Terminal value contribution 291.5

B. Value Interest Tax Shields


Net interest expense (Ex. 9a) 11 31.1 28.9 28.1 23.1 17.9 12.3 6.3
Interest tax shield (53.5%) 5.9 16.6 15.5 15.0 12.4 9.6 6.6 3.4

C. Enterprise Value
CCF 544.5
Ducati APV/CCF Valuation
1995 1996 1997 1998 1999 2000 2001 2002 2003

A. Value Unlevered Firm


EBIT (Ex. 9a) -5.4 58.2 79.4 96.3 111 123.3 135.2 146
-Taxes (53.5%) 0.0 31.1 42.5 51.5 59.4 66.0 72.3 78.1
EBIAT -5.4 27.1 36.9 44.8 51.6 57.3 62.9 67.9

+Depreciation (Ex. 9b) 6 7.3 9.1 11.1 13.5 15.7 18.1 20.7
+Amortization (Ex. 9b) 24.7 24.7 24.7 28.5 28.5 28.5 28.5 28.5
-Capital expenditures (Ex. 9b) 12.9 15.5 20 24 22 24 24 26
-Increase in NWC (From Sheet 'NWC') -9.3 2.9 33.4 18.0 3.4 11.7 10.9 10.8
Free Cash Flow 21.7 40.7 17.3 42.4 68.2 65.8 74.5 80.3

Capital Cash Flow = FCF + TS 27.6 57.3 32.8 57.5 80.5 75.4 81.1 83.7

Terminal Growth rate 0.05


Terminal Value (2.162003 Sales Ex. 9a, Ex. 4) 1584.8
Total Free Cash Flow 27.6 57.3 32.8 57.5 80.5 75.4 81.1 1668.5
Required return on assets 14.92%
Discount Factors 0.87021 0.75726 0.65898 0.57345 0.49902 0.43425 0.37789 0.32884
Discounted FCF 24.0 43.4 21.6 32.9 40.2 32.7 30.7 548.7

PV of Levered Firm 774.2


Terminal value contribution 521.1

B. Value Interest Tax Shields


Net interest expense (Ex. 9a) 11 31.1 28.9 28.1 23.1 17.9 12.3 6.3
Interest tax shield (53.5%) 5.9 16.6 15.5 15.0 12.4 9.6 6.6 3.4

C. Enterprise Value
CCF 774.2
Method Enterprise Value Equity Value 51%
APV with growth-based TV 551.74 271.74 138.59
APV with mulptiple-based T 793.13 513.13 261.70
CCF with growth-based TV 544.52 264.52 134.91
CCF with mulptiple-based T 774.18 494.18 252.03
Average 665.89 385.89 196.81
min 544.52 264.52 134.91
max 793.13 513.13 261.70
Terminal Value
850.73
1584.79
886.42
1584.79
1226.68
850.73
1584.79
Total Free Cash Flow 1995 1996 1997 1998 1999 2000 2001 2002
Min exit price -140.0
Max exit price -140.0
140 is price paid, as refrected in Ex. 9c.
Sensitivity analysis
Min exit price + max paid price -261.7
Max exit price + min paid price -134.9
Note: Calculation doesn't take into account any intermediate equity cash flows.
For instance, all the intermediate CF can be use to pay of debt.
2003 IRR
850.7 29.41%
1584.79 41.43%

850.7 18.34%
1584.79 42.18%
Italian Equity Market Data
e of the
Total Italian Averag
market Equity e
capitaliza Market Annual annual
tion Index (MIB) return return
1990 86,838 8,007 3.59%
1991 91,886 7,830 -2.21%
1992 89,468 6,916 ###
1993 120,983 9,500 37.36%
1994 151,614 9,813 3.29%
1995 168,142 9,138 -6.88%
1996 199433 9291 1.67%

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