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    Projected P&L and BS

    Uploaded by

    bipin kumar
    The document provides financial statements and ratios for Matrix Ltd. for Years 1, 2, 3 and projections for Years 4-8. It includes income statements, balance sheets, cash flow statements and ratios. The key information is that net sales and profits increased from Years 1 to 2 to 3. Projections show continuing growth in sales, profits, assets and retained earnings through Year 8. Debt levels also increase but remain below equity levels. Ratios remain positive and improve over time.

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    © All Rights Reserved
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    Projected P&L and BS

    Uploaded by

    bipin kumar
    27 views9 pages
    The document provides financial statements and ratios for Matrix Ltd. for Years 1, 2, 3 and projections for Years 4-8. It includes income statements, balance sheets, cash flow statements and ratios. The key information is that net sales and profits increased from Years 1 to 2 to 3. Projections show continuing growth in sales, profits, assets and retained earnings through Year 8. Debt levels also increase but remain below equity levels. Ratios remain positive and improve over time.

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    The document provides financial statements and ratios for Matrix Ltd. for Years 1, 2, 3 and projections for Years 4-8. It includes income statements, balance sheets, cash flow statements and ratios. The key information is that net sales and profits increased from Years 1 to 2 to 3. Projections show continuing growth in sales, profits, assets and retained earnings through Year 8. Debt levels also increase but remain below equity levels. Ratios remain positive and improve over time.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    27 views9 pages

    Projected P&L and BS

    Uploaded by

    bipin kumar
    The document provides financial statements and ratios for Matrix Ltd. for Years 1, 2, 3 and projections for Years 4-8. It includes income statements, balance sheets, cash flow statements and ratios. The key information is that net sales and profits increased from Years 1 to 2 to 3. Projections show continuing growth in sales, profits, assets and retained earnings through Year 8. Debt levels also increase but remain below equity levels. Ratios remain positive and improve over time.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    You are on page 1of 9

    Financial Statements of Matrix Ltd.

    Statement of Profit and Loss


    Year 1 Ratios Year 2
    Net sales 180 11.11% 200 14.50%
    Income from Marketable securities
    Non-operating Income
    Total Income 180 200

    Cost of Goods sold 100 0.55555556 105 0.525


    Selling and General Administration expense 30 0.16666667 35 0.175
    Depreciation 12 15 0.1
    Interest Expense 12 15 0.15
    Total Cost and Expenses 154 170

    PBT 26 30
    Taxes 8 0.30769231 9 0.3
    PAT 18 21
    Dividend 11 12
    Retained Earnings 7 9

    BALANCE SHEET
    Equity Capital 60 90
    Reserves& Surplus 40 49
    Debt 100 0.19 119 0.12605
    Total 200 258

    Fixed Assets 150 0.16666667 175 0.085714


    Investment 20
    Net current assets 50 0.26 63 0.111111
    Total 200 258

    Free cash flow forecast for Matrix Limited for the exiplicit forecast period
    Profit Before tax (1) 26 30
    Interest Expenses (2) 12 15
    Interest Income (3)
    Non-operating income (4)
    EBIT (A) (1+2-3-4) 38 45
    Tax Provision on income statement 8 9
    Tax Shield on interest expense 4.8 6
    Tax on Interest incme
    Tax on non-operating income
    Taxes on EBIT: (B) (5+6-7-8) 12.8 15
    NOPLAT (C= A-B) 25.2 30
    Net investment (D) 38
    Free cash flow (F= C-D) -8
    ROIC (G=C/D) 15.00%
    Growth Rate (H=D/Invested capital) 19.00%

    Continuing value FCF9/(WACC-g) FCF9= FCF8*(1+g)

    Value of operations
    PV (FCF) $1.75 $3.85 $6.07 $7.70
    PV (CV)
    Value of operations

    Enterprise value value of operations + value of investments


    295.22+25 (Invt in 3rd year or present value of investme
    $320.22
    Equity value Enterprise value-value of non-equity claims
    322.19-134 (value of Debt in 3rd year or present value of debt at the be
    $186.22

    Other DCF Models


    1. Equity DCF Models
    a. Dividend Discount Model
    b. Free Cash Flow to Equity Model

    b. Free Cash Flow to Equity Model


    FCFE= (Profit after tax - Preference Dividend) -
    (Change in Capital expenditure) -
    (Change in net working capital) +
    (Change in debt) +
    ( Change in preference share capital) -
    (Change in investment in marketable securities)
    FCFE

    Equity Value y3 pv formula - Cost of equity or r=18% as per the question


    We assume that FCF TO Equity will grow at a constant rate of 10% per year after the explicit forecast period

    Equity Value Y3

    2. Adjusted Present Value Model


    Unlevered Equity Free Cash Flow =
    NOPLAT+
    Depreciation-
    Change in Capital Expenditure-
    Change in net working Capital
    Unlevered Equity Free Cash Flow =

    Present value Y3 of unlevered equity free cash flow


    Interest
    Tax Rate

    IXT
    Present value Y3 of Interest Tax shield
    Present value of cash flow during the planning period

    Terminal value of the firm at the end of the planning period =


    Free cash flow in year 9 = FCF8 X (1+g) (Here, FCF 8 is the total of unlevered free cash flow + interest tax shield)
    Terminal value of the firm at the end of the planning period = FCF to firm 9 (1+g)/ WACC-g

    Present values of cash flows during the planning period and terminal value
    Present value of terminal value
    Present values of cash flows during the planning period and terminal value

    3. Economic Profit Model


    Free cash flow forecast for Matrix Limited for the exiplicit forecast period
    Invested Capital (Consider the value of Beginning of the year for 200
    computations) = Total assets-ivestments
    238
    NOPLAT (C= A-B) 25.2 30
    Net investment (D) 38
    WACC(%) 14 14
    Capital Charge (IC X WACC)
    Economic Profit (NOPLAT-Capital Charge)
    Growth Rate (D/Invested capital)

    Present value of cash flow during the planning period


    Economic profit at the year 9
    Present value of cash flow for the Continuing period
    Present value of EP Stream
    Invested capital in year 4 (beginning value of year 4)
    Enterprise Value Invested capital in year 4 + Present value of EP Stream
    Year 3 Avg ratio Year 4 Year 5 Year 6 Year 7 Year 8
    229 3.40% 0.128055556 1.185555556 271 322 382 452 536
    3 0 0
    8
    240 271 322 382 452 536

    125 0.54585153 0.542135695 147 174 207 245 291


    45 0.19650655 0.179391072 49 58 68 81 96
    18 0.10285714 0.101428571 19 22 24 28 31
    16 0.13445378 0.142226891 19 22 26 30 34
    204 234 276 325 384 452

    36 37 46 56 69 84
    12 0.33333333 0.3 11 14 17 21 25
    24 26 32 39 48 59
    12
    12

    90 90 90 90 90 90
    61 ? 52 69 90 113 139
    134 0.15802521 1.15802521 155 180 208 241 279
    285 297 339 388 444 508

    190 0.12619048 1.126190476 214 241 271 306 344


    25
    70 0.18555556 1.185555556 83 98 117 138 164
    285 297 339 388 444 508
    14.28% 14.34% 14.40% 14.47%

    36 37 46 56 69 84
    16 19 22 26 30 34
    3
    8
    41 56 68 82 98 118
    12 11 14 17 21 25
    6.4 6 7 8 9 10
    1.2
    3.2
    14 17 20 25 30 36
    27 39 48 57 69 83
    22 37 42 49 56 64
    5 2 5 9 13 19
    11.34% 15.17% 16.01% 16.88% 17.76% 18.66%
    9.24% 14.22% 14.28% 14.34% 14.40% 14.47%

    (Here r=g, hence DCF can not be applied. Thus, consider


    the normal scenario/ or last year's growth rate, i.e.,
    9.24% and the future growth rate is 14%. So the safer
    Growth rate=10% side we consider growth rate g = 10%)
    20 512.1160359

    $9.87 Total $29.24


    $265.98
    $295.22

    investments
    present value of investment at the beginning of fourth year)

    or present value of debt at the beginning of fourth year)

    Year 4 Year 5 Year 6 Year 7 Year 8


    26 32 39 48 59
    24 27 30 34 39
    13 15 18 22 26
    21 25 28 33 38

    -25
    35 14 19 25 33

    uity or r=18% as per the question $29.92 $10.21 $11.63 $13.00 $14.30
    forecast period FCF/ r-g X 1/ (1+r)5
    PV

    Year 4 Year 5 Year 6 Year 7 Year 8


    39 48 57 69 83
    19 22 24 28 31
    24 27 30 34 39
    13 15 18 22 26
    22 27 33 41 50

    $18.42 $19.29 $20.12 $20.92 $21.69


    19 22 26 30 34
    30% 30% 30% 30% 30%
    5.72 6.62 7.67 8.88 10.28
    $5.06 $5.19 $5.31 $5.45 $5.58

    interest tax shield) 59.90

    260 297 339 388 444 508


    27 39.43 47.55 57.28 68.92 82.85
    22 36.97 42.40 48.67 55.89 64.23
    14 14% 14% 14% 14% 14%
    36.40 41.58 47.51 54.32 62.15
    3.03 5.97 9.76 14.59 20.70
    14.22% 14.28% 14.34% 14.40% 14.47%

    $2.66 $4.60 $6.59 $8.64 $10.75


    22.77
    569.292669

    lue of EP Stream
    cagr MVA Reg equation
    180
    200 0.111111
    229 0.145 0.12805555555556
    320 248.236 258.77
    360 346.88 361.6
    400 390.24 406.8
    440 433.6 452
    -
    -
    +
    +
    -

    $79.06
    $35.98
    449.783079 $196.60
    $275.66

    +
    -
    -

    $100.43

    $26.59
    $127.02

    yr 9

    65.89 Where FCF to firm in year 9 = FCF8 X(1+g). G=10% (already calculated earlier)
    1647.371734

    $720.08
    $847.10

    $33.24

    $295.67
    $328.91
    260.00
    $588.91

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