Exam 18: Financial Modelling and Pro Forma Analysis

A firm forecasts its free cash flow will be $100,000 one year from today.Free cash flows are expected to grow at 4% for the following 4 years.At the forecast horizon,the firm's growth results in an EBITDA forecast of $650,000.If its EBITDA multiple is 11 and the discount rate is 6%,what is the value of the firm?

A firm has $50 million in equity and $20 million of debt,it pays dividends of 30% of net income,and has a net income of $10 million.What is the firm's sustainable growth rate?

What is the major shortcoming of the percent of sales method for firms experiencing rapid growth?

Why is EBITDA multiple used for valuation rather than sales or earnings?

Use the table for the question(s) below. Pro Forma Income Statement for Ideko, 2014-2019 -The amount of net working capital for Ideko in 2015 is closest to:

Net new financing that we need to equate the assets and liabilities is also called the "plug."

A firm has ROA of 12%,ROE of 20%,and a retention rate of 40%.What is the firm's internal growth rate?

Is total net working capital or incremental net working capital more relevant for calculation of free cash flow?

What is net new financing?

What is the implied assumption in percent of sales method?

While the assets and accounts payable of a firm may reasonably be expected to grow with sales,________ will not naturally grow with sales.

Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation unlevered price-earnings ratio of Ideko in 2015 is closest to:

Using the percent of sales method,and assuming 20% growth in sales,estimate Billy's Burgers' accounts payable for 2016.

The market size for Loppins is 60 million units.If SPI Inc.has a market share of 20% and the average sales price is $3 per Loppin,what is the dollar amount of sales of SPI?

Based upon the average EV/EBITDA ratio of the comparable firms,Ideko's target economic value is closest to:

Kendo Corp.is projecting sales of $14 million in the coming year.If the size of the market is $120 million,and Kendo sells its products for an average sale price of $36.25,what is Kendo's projected market share?

A firm plans a new expansion,which will result in free cash flows of $50,000 in year 1,$60,000 in year 2,and $70,000 in year 3.The firm's continuation value after 3 years is $540,000.The expansion requires an investment of $40,000 today,and will be financed entirely with debt,resulting in an interest expense of $8,000 in each of the 3 years.If the firm's unlevered cost of capital is 9%,and its cost of debt is 6%,what is the firm's value?

How do we compute net new financing?

A firm has $50 million in equity and $20 million of debt,it pays dividends of 30% of net income,and has a net income of $10 million.What is the firm's internal growth rate?

Given the following data for a given period,compute the free cash flow to the firm: Net Income = $10,000 After-tax Interest Expense = $1000 Depreciation = $1000 Increase in NWC = $1000 Capital Expenditures = $2000