| Date of valuation |
Mar-18 |
| Company name |
Twitter |
| Numbers from your base year below ( in consistent units) |
|
|
|
|
| Updated on January 2022 with 2022 Industry averages |
| Country of incorporation |
United States |
| Industry (US) |
Advertising |
|
| Industry averages. |
| Industry (Global) |
Advertising |
|
| Most recent 10-k annual report (in million dollars) |
Note |
Report page number |
|
|
|
| Industry (US data) |
Industry (Global data) |
| Revenues |
| Read from 10-k |
| Revenue growth in the most recent year = |
|
|
| 7.13% |
4.93% |
| Operating income or EBIT |
$ 273.00 |
|
| Cost of capital = |
|
|
| 5.64% |
7.00% |
| Interest expense |
$ 152.90 |
| Book value of equity |
| Read from 10-k |
| Book value of debt |
$ 5,546.60 |
| Number of shares outstanding = |
797.60 |
| Current stock price = |
$ 42.00 |
| Effective tax rate = |
25.00% |
| Marginal tax rate = |
25.00% |
| The value drivers below (Assumptions): |
| Revenue growth rate for the following 5 years |
| Insert your estimate here and write your reasons in report |
| Operating Margin for the following 5 years |
20.00% |
| Market and company numbers |
| Riskfree rate |
2.50% |
| Cost of capital (WACC) |
| Insert your estimate here and write your reasons in report |
| Standard deviation on stock price = |
30.00% |
| Sales-to-Capital Ratio |
2.80% |
Annually |
| perpetual growth rate of FCF (g) |
4.00% |
| Note: To simplify, |
| EBIT=Revenues* Operating Margin |
| FCFF=EBIT*(1-t)-Reinvestment |
| Reinvestment = (Current Year Revenues − Previous Year Revenues) × Sales-to-Capital Ratio |
| Value of firm = PV(next five years' FCFFs)+PV(terminal value) |
| where terminal value=FCFF_{year5}*(1+g)/(r-g) and PV(terminal value)=terminal value/(1+r)^5 |
| Value of equity= Value of the firm - Debt - Minority interest + Cash + Non-operating assets |
| Forecast for the next 5 years using your estimated revenue growth rate and cost of capital for this five years. After that, Free Cash Flow each will grow at 4% growth rate, the cost of capital will be the same as the previous years |
| Hint: you can first calculate the sum of PV(FCFF) of the first five years. Then use growing perpetuity formula given above to get the PV(terminal value) |
|
| Base year |
1 |
2 |
3 |
4 |
5 |
Terminal Value |
| Revenue growth rate |
| 0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
| Revenues |
$ - 0 |
$ - 0 |
$ - 0 |
$ - 0 |
$ - 0 |
$ - 0 |
| Operating margin |
19.02% |
20.00% |
20.00% |
20.00% |
20.00% |
20.00% |
| EBIT |
| Tax rate (t) |
25.00% |
25.00% |
25.00% |
25.00% |
25.00% |
25.00% |
| EBIT*(1-t) |
| - Reinvestment |
| FCFF |
| Cost of capital |
| 0.00% |
0.00% |
0.00% |
0.00% |
0.00% |
| Cumulated discounted factor |
| 1 |
1 |
1 |
1 |
1 |
| PV(FCFF) |
| Value of the company |
$ - 0 |
| - Debt |
$ 5,546.60 |
Value of debt is 5546.6 million dollars |
| - Minority interests |
$ - 0 |
| + Cash |
$ 6,393.70 |
Value of cash is 6393.7 million dollars |
| + Non-operating assets |
$ - 0 |
| Value of equity |
| Value of equity= Value of the firm - Debt - Minority interest + Cash + Non-operating assets |
| - Value of options |
$17.91 |
Value of options is 17.91 million dollars |
| Value of equity in common stock |
| Number of shares |
- 0 |
| Estimated value /share |
arne_kilz
Assignment1-excel.xlsx
