Finance project
salem alketbi
cpb.xlsxIS
| Income Statement | |||
| All numbers in thousands | |||
| Revenue | 8/2/15 | 7/31/16 | 7/30/17 |
| Total Revenue | 8,082,000 | 7,961,000 | 7,890,000 |
| Cost of Revenue | 5,300,000 | 5,181,000 | 4,831,000 |
| Gross Profit | 2,782,000 | 2,780,000 | 3,059,000 |
| Operating Expenses | |||
| Research Development | 117000 | 124000 | 98000 |
| Selling General and Administrative | 1,509,000 | 1,665,000 | 1,543,000 |
| Non Recurring | 102,000 | 31,000 | 18,000 |
| Others | - | - | - |
| Total Operating Expenses | - | - | - |
| Operating Income or Loss | 1,054,000 | 960,000 | 1,400,000 |
| Income from Continuing Operations | |||
| Total Other Income/Expenses Net | 3000 | 4000 | 5000 |
| Earnings Before Interest and Taxes | 1,057,000 | 964,000 | 1,405,000 |
| Interest Expense | 108,000 | 115,000 | 112,000 |
| Income Before Tax | 949,000 | 849,000 | 1,293,000 |
| Income Tax Expense | 283,000 | 286,000 | 406,000 |
| Minority Interest | -4,000 | 8,000 | 8,000 |
| Net Income From Continuing Ops | 666,000 | 563,000 | 887,000 |
| Non-recurring Events | |||
| Discontinued Operations | - | - | - |
| Extraordinary Items | - | - | - |
| Effect Of Accounting Changes | - | - | - |
| Other Items | - | - | - |
| Net Income | |||
| Net Income | 666,000 | 563,000 | 887,000 |
| Preferred Stock And Other Adjustments | - | - | - |
| Net Income Applicable To Common Shares | 666,000 | 563,000 | 887,000 |
BS
| Balance Sheet | |||
| All numbers in thousands | |||
| Period Ending | 8/2/15 | 7/31/16 | 7/30/17 |
| Current Assets | |||
| Cash And Cash Equivalents | 253,000 | 296,000 | 319,000 |
| Short Term Investments | - | - | - |
| Net Receivables | 647,000 | 626,000 | 605,000 |
| Inventory | 995,000 | 940,000 | 902,000 |
| Other Current Assets | 198,000 | 46,000 | 74,000 |
| Total Current Assets | 2,093,000 | 1,908,000 | 1,900,000 |
| Long Term Investments | - | - | - |
| Property Plant and Equipment | 2,347,000 | 2,407,000 | 2,454,000 |
| Goodwill | 2,344,000 | 2,263,000 | 2,115,000 |
| Intangible Assets | 1,205,000 | 1,152,000 | 1,118,000 |
| Accumulated Amortization | - | - | - |
| Other Assets | 88,000 | 107,000 | 139,000 |
| Deferred Long Term Asset Charges | - | - | - |
| Total Assets | 8,077,000 | 7,837,000 | 7,726,000 |
| Current Liabilities | |||
| Accounts Payable | 1,263,000 | 1,336,000 | 1,358,000 |
| Short/Current Long Term Debt | 1,543,000 | 1,219,000 | 1,037,000 |
| Other Current Liabilities | 0 | 0 | 0 |
| Total Current Liabilities | 2,806,000 | 2,555,000 | 2,395,000 |
| Long Term Debt | 2,539,000 | 2,314,000 | 2,499,000 |
| Other Liabilities | 850,000 | 1,039,000 | 697,000 |
| Deferred Long Term Liability Charges | 505,000 | 396,000 | 490,000 |
| Minority Interest | -4,000 | 8,000 | 8,000 |
| Negative Goodwill | - | - | - |
| Total Liabilities | 6,696,000 | 6,312,000 | 6,089,000 |
| Stockholders' Equity | |||
| Misc. Stocks Options Warrants | - | - | - |
| Redeemable Preferred Stock | - | - | - |
| Preferred Stock | - | - | - |
| Common Stock | 12,000 | 12,000 | 12,000 |
| Retained Earnings | 1,754,000 | 1,927,000 | 2,385,000 |
| Treasury Stock | -556,000 | -664,000 | -1,066,000 |
| Capital Surplus | 339,000 | 354,000 | 359,000 |
| Other Stockholder Equity | -168,000 | -104,000 | -53,000 |
| Total Stockholder Equity | 1,381,000 | 1,525,000 | 1,637,000 |
| Net Tangible Assets | -2,168,000 | -1,890,000 | -1,596,000 |
CF
| Statement of Cash Flow | |||
| All numbers in thousands | |||
| Period Ending | 8/2/15 | 7/31/16 | 7/30/17 |
| Net Income | 666,000 | 563,000 | 887,000 |
| Operating Activities, Cash Flows Provided By or Used In | |||
| Depreciation | 303,000 | 308,000 | 318,000 |
| Adjustments To Net Income | 249,000 | 529,000 | 143,000 |
| Changes In Accounts Receivables | 12,000 | 24,000 | 28000 |
| Changes In Liabilities | 25,000 | 13,000 | -53,000 |
| Changes In Inventories | -18,000 | 59,000 | 46,000 |
| Changes In Other Operating Activities | -31,000 | -5,000 | -78,000 |
| Total Cash Flow From Operating Activities | 1,206,000 | 1,491,000 | 1,291,000 |
| Investing Activities, Cash Flows Provided By or Used In | |||
| Capital Expenditures | -380,000 | -341,000 | -338,000 |
| Investments | - | - | - |
| Other Cash flows from Investing Activities | -223,000 | -13,000 | -30,000 |
| Total Cash Flows From Investing Activities | -603,000 | -354,000 | -368,000 |
| Financing Activities, Cash Flows Provided By or Used In | |||
| Dividends Paid | -394,000 | -390,000 | -420,000 |
| Sale Purchase of Stock | -226,000 | -141,000 | -435,000 |
| Net Borrowings | 91,000 | -547,000 | -34,000 |
| Other Cash Flows from Financing Activities | -21,000 | -21,000 | -22,000 |
| Total Cash Flows From Financing Activities | -550,000 | -1,099,000 | -911,000 |
| Effect Of Exchange Rate Changes | -32,000 | 5,000 | 11,000 |
| Change In Cash and Cash Equivalents | 21,000 | 43,000 | 23,000 |
Ratios
| Financial ratios: | |||
| A. Profitability Ratios: | 2016 | 2015 | 2014 |
| 1. Return on Assets (net income/total assets) | 11.48% | 7.18% | 8.25% |
| 2. Return on Sales, (aka profit margin percent) (net income/sales) | 11.24% | 7.07% | 8.24% |
| 3. Assets-to-Equity (total assets/stockholder’s equity) | 4.72 | 5.14 | 5.85 |
| 4. Return on Equity (net income/stockholder’s equity) | 54.18% | 36.92% | 48.23% |
| B. Efficiency Ratios: | |||
| 1. Asset Turnover (sales/total assets) | 1.02 | 1.02 | 1.00 |
| 2. A/R Turnover Rate (sales/accounts receivable) | 13.04 | 12.72 | 12.49 |
| 3. Inventory Turnover Rate (COGS/average inventory) | 5.36 | 5.51 | 5.33 |
| 4. Fixed Asset Turnover (sales/average fixed assets) | 1.34 | 1.34 | 1.35 |
| C. Leverage Ratios: | |||
| 1. Debt Ratio (total liabilities/total assets) | 0.79 | 0.81 | 0.83 |
| 2. Debt-to-Equity Ratio (total liabilities/stockholder’s equity) | 3.72 | 4.14 | 4.85 |
| 3. Times Interest Earned (earnings before interest and taxes/interest expense) | 12.50 | 8.35 | 9.76 |
| D. Liquidity Ratios: | |||
| 1. Current Ratio (current assets/current liabilities) | 0.793 | 0.747 | 0.746 |
| 2. Working Capital (current assets – current liabilities) in thousands | (495,000) | (647,000) | (713,000) |
Dupont Analaysis
| Du Pont | ROE = NI/Equity = NI/Sales *Sales/Assets * Assets/Equity | |||
| Year | ROE | Operation Management | Asset Management | Leverage Management |
| NI/Equity | NI/Sales | Sales/Assets | Assets/Equity | |
| 2014 | 48.23% | 8.24% | 1.0006 | 5.849 |
| 2015 | 36.92% | 7.07% | 1.0158 | 5.139 |
| 2016 | 54.18% | 11.24% | 1.0212 | 4.720 |
Project2
| CPB | S&P500 | |||||||||||||
| Date | Adj Close | Return % | Adj Close | Return % | ||||||||||
| 1/1/12 | 27.03566 | 5.11% | 1312.410034 | 4.06% | ||||||||||
| 2/1/12 | 28.417295 | 1.59% | 1365.680054 | 3.13% | ||||||||||
| 3/1/12 | 28.869305 | -0.06% | 1408.469971 | -0.75% | ||||||||||
| 4/1/12 | 28.852255 | -5.49% | 1397.910034 | -6.27% | ||||||||||
| 5/1/12 | 27.26845 | 5.30% | 1310.329956 | 3.96% | ||||||||||
| 6/1/12 | 28.713593 | -0.81% | 1362.160034 | 1.26% | ||||||||||
| 7/1/12 | 28.481337 | 7.06% | 1379.319946 | 1.98% | ||||||||||
| 8/1/12 | 30.49206 | -0.91% | 1406.579956 | 2.42% | ||||||||||
| 9/1/12 | 30.21439 | 1.29% | 1440.670044 | -1.98% | ||||||||||
| 10/1/12 | 30.604862 | 5.06% | 1412.160034 | 0.28% | ||||||||||
| 11/1/12 | 32.152805 | -5.06% | 1416.180054 | 0.71% | ||||||||||
| 12/1/12 | 30.525488 | 6.92% | 1426.189941 | 5.04% | ||||||||||
| 1/1/13 | 32.637428 | 12.12% | 1498.109985 | 1.11% | ||||||||||
| 2/1/13 | 36.593746 | 10.20% | 1514.680054 | 3.60% | ||||||||||
| 3/1/13 | 40.327808 | 2.31% | 1569.189941 | 1.81% | ||||||||||
| 4/1/13 | 41.261322 | -7.76% | 1597.569946 | 2.08% | ||||||||||
| 5/1/13 | 38.060699 | 4.63% | 1630.73999 | -1.50% | ||||||||||
| 6/1/13 | 39.821041 | 4.49% | 1606.280029 | 4.95% | ||||||||||
| 7/1/13 | 41.608055 | -7.14% | 1685.72998 | -3.13% | ||||||||||
| 8/1/13 | 38.638714 | -5.72% | 1632.969971 | 2.97% | SUMMARY OUTPUT | |||||||||
| 9/1/13 | 36.428482 | 4.57% | 1681.550049 | 4.46% | ||||||||||
| 10/1/13 | 38.092865 | -8.32% | 1756.540039 | 2.80% | Regression Statistics | |||||||||
| 11/1/13 | 34.923328 | 11.75% | 1805.810059 | 2.36% | Multiple R | 0.2606879041 | ||||||||
| 12/1/13 | 39.026119 | -4.78% | 1848.359985 | -3.56% | R Square | 0.0679581834 | ||||||||
| 1/1/14 | 37.159573 | 5.86% | 1782.589966 | 4.31% | Adjusted R Square | 0.0516065725 | ||||||||
| 2/1/14 | 39.338341 | 3.63% | 1859.449951 | 0.69% | Standard Error | 0.0532201485 | ||||||||
| 3/1/14 | 40.764362 | 1.36% | 1872.339966 | 0.62% | Observations | 59 | ||||||||
| 4/1/14 | 41.318424 | 1.61% | 1883.949951 | 2.10% | ||||||||||
| 5/1/14 | 41.982746 | -0.20% | 1923.569946 | 1.91% | ANOVA | |||||||||
| 6/1/14 | 41.900433 | -9.21% | 1960.22998 | -1.51% | df | SS | MS | F | Significance F | |||||
| 7/1/14 | 38.040581 | 8.50% | 1930.670044 | 3.77% | Regression | 1 | 0.0117715427 | 0.0117715427 | 4.1560543548 | 0.0461339649 | ||||
| 8/1/14 | 41.273708 | -4.66% | 2003.369995 | -1.55% | Residual | 57 | 0.1614458996 | 0.0028323842 | ||||||
| 9/1/14 | 39.349083 | 3.37% | 1972.290039 | 2.32% | Total | 58 | 0.1732174423 | |||||||
| 10/1/14 | 40.675133 | 3.27% | 2018.050049 | 2.45% | ||||||||||
| 11/1/14 | 42.007084 | -2.83% | 2067.560059 | -0.42% | Coefficients | Standard Error | t Stat | P-value | Lower 95% | Upper 95% | Lower 95.0% | Upper 95.0% | ||
| 12/1/14 | 40.819603 | 3.95% | 2058.899902 | -3.10% | Intercept | 0.0101834269 | 0.0072801413 | 1.3987952254 | 0.1672922463 | -0.0043948046 | 0.0247616585 | -0.0043948046 | 0.0247616585 | |
| 1/1/15 | 42.43383 | 2.57% | 1994.98999 | 5.49% | X Variable 1 | 0.4781371623 | 0.2345372833 | 2.0386403201 | 0.0461339649 | 0.0084843536 | 0.947789971 | 0.0084843536 | 0.947789971 | |
| 2/1/15 | 43.524567 | -0.09% | 2104.5 | -1.74% | ||||||||||
| 3/1/15 | 43.487202 | -3.95% | 2067.889893 | 0.85% | Beta | 0.4781371623 | ||||||||
| 4/1/15 | 41.768261 | 8.85% | 2085.51001 | 1.05% | ||||||||||
| 5/1/15 | 45.46627 | -1.43% | 2107.389893 | -2.10% | ||||||||||
| 6/1/15 | 44.817291 | 3.48% | 2063.110107 | 1.97% | ||||||||||
| 7/1/15 | 46.378605 | -2.03% | 2103.840088 | -6.26% | ||||||||||
| 8/1/15 | 45.435074 | 5.61% | 1972.180054 | -2.64% | ||||||||||
| 9/1/15 | 47.981857 | 0.22% | 1920.030029 | 8.30% | ||||||||||
| 10/1/15 | 48.086006 | 3.48% | 2079.360107 | 0.05% | ||||||||||
| 11/1/15 | 49.761276 | 0.59% | 2080.409912 | -1.75% | ||||||||||
| 12/1/15 | 50.056568 | 7.35% | 2043.939941 | -5.07% | ||||||||||
| 1/1/16 | 53.733414 | 10.13% | 1940.23999 | -0.41% | ||||||||||
| 2/1/16 | 59.176743 | 3.30% | 1932.22998 | 6.60% | ||||||||||
| 3/1/16 | 61.131733 | -3.26% | 2059.73999 | 0.27% | ||||||||||
| 4/1/16 | 59.138409 | -1.37% | 2065.300049 | 1.53% | ||||||||||
| 5/1/16 | 58.327618 | 9.84% | 2096.949951 | 0.09% | ||||||||||
| 6/1/16 | 64.066971 | -6.40% | 2098.860107 | 3.56% | ||||||||||
| 7/1/16 | 59.964684 | -2.04% | 2173.600098 | -0.12% | ||||||||||
| 8/1/16 | 58.743397 | -9.91% | 2170.949951 | -0.12% | ||||||||||
| 9/1/16 | 52.919361 | -0.66% | 2168.27002 | -1.94% | ||||||||||
| 10/1/16 | 52.571083 | 5.38% | 2126.149902 | 3.42% | ||||||||||
| 11/1/16 | 55.397797 | 6.29% | 2198.810059 | 1.82% | ||||||||||
| 12/1/16 | 58.8839 | ERROR:#DIV/0! | 2238.830078 | ERROR:#DIV/0! |
Return % of ECL & S&P500
CPB
4.0589464130841746E-2 3.1332314530530647E-2 -7.4974527092703802E-3 -6.265072563317764E-2 3.9554982134591521E-2 1.2597574126154365E-2 1.9763369680148246E-2 2.4236153696477025E-2 -1.9789409878227415E-2 2.8467170173434031E-3 7.068230463864511E-3 5.0428096519578469E-2 1.1060649195259176E-2 3.5987723516956116E-2 1.8085767859252311E-2 2.0762811721046104E-2 -1.4999301636062778E-2 4.9462079815224991E-2 -3.1298019033866864E-2 2.9749523177239112E-2 4.4595752618006079E-2 2.8049471635186451E-2 2.356279155049279E-2 -3.5582905675162646E-2 4.3117029976595278E-2 6.9321656079357474E-3 6.2007889650528281E-3 2.1030280012996005E-2 1.9058331658920569E-2 -1.5079830581919862E-2 3.7655295489735119E-2 -1.5513837223063764E-2 2.3201460786772321E-2 2.4533588760364822E-2 -4.1885878779204244E-3 -3.1040805790470194E-2 5.4892511014553946E-2 -1.739610691375626E-2 8.5208197301247512E-3 1.0491382393316817E-2 -2.1011672375900514E-2 1.9742029696721453E-2 -6.2580818167202845E-2 -2.6442831573227132E-2 8.2983117760394132E-2 5.0486926072412786E-4 -1.7530185176314439E-2 -5.073532197294639E-2 -4.1283604302990717E-3 6.5991114577365062E-2 2.6993984808731941E-3 1.5324602357572603E-2 9.1092112097812539E-4 3.5609801125254359E-2 -1.2192431360480427E-3 -1.2344508443253854E-3 -1.9425679279557517E-2 3.4174522187570444E-2 1.8200762196895148E-2 0 5.110417130560152E-2 1.5906158555907712E-2 -5.9059267273675609E-4 -5.489362963137534E-2 5.2996888345322013E-2 -8.0887125480952893E-3 7.0597914697614117E-2 -9.1063050512165677E-3 1.2923378562333943E-2 5.0578336213376707E-2 -5.0611976155735094E-2 6.9186117515959156E-2 0.12122027507804845 0.10204098809670903 2.3148146311349205E-2 -7.7569569874663791E-2 4.6250910946223023E-2 4.4876124659824823E-2 -7.1364571114895914E-2 -5.7202524908049446E-2 4.5689057260195565E-2 -8.3205529434449366E-2 0.11747995494587471 -4.7828122494066094E-2 5.8632751242862824E-2 3.6250156050047888E-2 1.3591823171426043E-2 1.6078105980034341E-2 -1.9606387824179228E-3 -9.2119620816328962E-2 8.4991525234590748E-2 -4.6630775214090314E-2 3.3699641742604314E-2 3.2746076085356624E-2 -2.8268589174149761E-2 3.9545387053372405E-2 2.5704420270336037E-2 -8.5848068287486257E-4 -3.9527514324789181E-2 8.8536341026982157E-2 -1.4273856201531432E-2 3.483731312541849E-2 -2.0344100474777083E-2 5.6053237637513131E-2 2.1705912716134534E-3 3.4839034042461359E-2 5.9341725883395036E-3 7.3453817289271806E-2 0.10130249680394399 3.3036458258610013E-2 -3.2607025879668683E-2 -1.3710057 705475287E-2 9.8398549380158018E-2 -6.4031230694517993E-2 -2.0366771214870405E-2 -9.9143670564370012E-2 -6.581296399251646E-3 5.3769369750286344E-2 6.2928549306753068E-2 0
Project 3
| US Treasury Bonds Rates | |||
| Maturity | Yield | ||
| 10 Year | 2.32 | ||
| 30 Year | 2.76 | ||
| Source: finance.yahoo.com | |||
| rs the cost of common equity: | |||
| Beta | 0.478 | ||
| Risk free | 4.00% | ||
| market return average return of S&P500 | 10.38% | ||
| rs=rRF+ (Rm-rRf)X beta | 7.05% | ||
| Market value of equity : market capital | |||
| number of shares outstanding | 291,830,000 | ||
| Market price as of DEC 31, 2016 | 118.05 | ||
| total market value as of June 30,2016 | 34,450,531,500 | ||
| Book value of debts as of june 30 , 2016 | 3,694,000,000 | ||
| total value of capital structure | 38,144,531,500 | ||
| Weight of debt | 9.68% | ||
| weight of equity | 90.32% | ||
| Cost of debt Rd Company's rating A- | 5.50% | ||
| estimated taxes | 2016 | 2015 | 2014 |
| Income Before Tax | 1,293,000 | 849,000 | 949,000 |
| Income Tax Expense | 406,000 | 286,000 | 283,000 |
| Effective tax rates | 31.40% | 33.69% | 29.82% |
| average tax rate | 31.64% | ||
| WACC: | |||
| Weight of equity | 90.32% | ||
| Weight of debt | 9.68% | ||
| cost of equity | 7.05% | ||
| cost of debt | 5.50% | ||
| tax rate | 33.69% | ||
| WACC | 6.722% |
Divs
| Annual Growth | ||||||||||
| Date | Dividend | Annualized DIV | Year | Ann Div | LN(DIV) | -58.5% | ||||
| 10/7/16 | 0.35 | 1.286 | 2012 | 1.45 | 0.372 | 107.3% | ||||
| 7/7/16 | 0.312 | 2013 | 0.602 | -0.507 | 0.0% | |||||
| 4/7/16 | 0.312 | 2014 | 1.248 | 0.222 | 3.0% | |||||
| 1/7/16 | 0.312 | 2015 | 1.248 | 0.222 | 12.97% | = Average Growth | ||||
| 10/9/15 | 0.312 | 1.248 | 2016 | 1.286 | 0.252 | |||||
| 7/9/15 | 0.312 | Dividends growth model | ||||||||
| 4/9/15 | 0.312 | r | 6.72% | |||||||
| 1/8/15 | 0.312 | growth | 3.0% | |||||||
| 10/8/14 | 0.312 | 1.248 | Last dividend | 1.286 | ||||||
| 7/3/14 | 0.312 | expected price | 36.0419987127 | |||||||
| 4/4/14 | 0.312 | |||||||||
| 1/3/14 | 0.312 | |||||||||
| 10/4/13 | 0.312 | 0.602 | ||||||||
| 7/3/13 | 0.29 | |||||||||
| 12/12/12 | 0.58 | 1.45 | ||||||||
| 10/4/12 | 0.29 | |||||||||
| 7/5/12 | 0.29 | |||||||||
| 4/4/12 | 0.29 | |||||||||
FCF
| Corporate Valuation and Financial Planning | |||||||||
| Financial Planning at Campbell Soup, Inc. | |||||||||
| We begin with Campbell Soup's most recent financial statements and selected additional data. | |||||||||
| Figure 12-1 | |||||||||
| Campbell Soup’s Most Recent Financial Statements (Millions, Except for Per Share Data) | |||||||||
| INCOME STATEMENTS | BALANCE SHEETS | ||||||||
| 2016 | 2017 | Assets | 2016 | 2017 | |||||
| Net sales | $ 7,961 | $ 7,890 | Cash | $ 296 | $ 319 | ||||
| COGS (excl. depr.) | 5,181 | 4,831 | ST Investments | - | - | ||||
| Depreciation | 308 | 318 | Accounts receivable | 626 | 605 | ||||
| Other operating expenses | 1,388 | 1,243 | Inventories | 940 | 902 | ||||
| EBIT | $ 1,084 | $ 1,498 | Other Current assets | 46 | 74 | ||||
| other Income/Expense | - | - | Total CA | $ 1,908 | $ 1,900 | ||||
| Interest expense | 115 | 112 | Long term investments | - | - | ||||
| Pre-tax earnings | $ 969 | $ 1,386 | Net fixed Assets | 5,929 | 5,826 | ||||
| Taxes () | 286 | 406 | Total assets | $ 7,837 | $ 7,726 | ||||
| NI before pref. div. | $ 563 | $ 887 | |||||||
| Discontinued operation | - 0 | - 0 | Liabilities and equity | ||||||
| Preferred div. | - | - | Accounts payable | $ 1,336 | $ 1,358 | ||||
| Net income | $ 563 | $ 887 | Accruals | - | - | ||||
| Notes payable | 1,219 | 1,037 | |||||||
| Other Data | Total CL | $ 2,555 | $ 2,395 | ||||||
| Common dividends | $390 | $420 | Long-term bonds | 3,757 | 3,694 | ||||
| Addition to RE | $173 | $467 | Total liabilities | $ 6,312 | $ 6,089 | ||||
| Tax rate | 34% | 31% | Preferred stock | - | - | ||||
| Shares of common stock | 301 | 292 | Common stock | 12 | 12 | ||||
| Earnings per share | $1.87 | $3.04 | Other Equity | (414) | (760) | ||||
| Dividends per share | $1.30 | $1.44 | Retained earnings | 1,927 | 2,385 | ||||
| Price per share | $58.74 | $45.00 | Total common equity | $ 1,525 | $ 1,637 | ||||
| Total liabs. & equity | $ 7,837 | $ 7,726 | |||||||
| Campbell Soup's Forecast: Inputs for the Selected Scenario | |||||||||
| Status Quo | Industry | Campbell Soup | Campbell Soup | ||||||
| Inputs | Actual | Actual | Forecast | ||||||
| 1. Operating Ratios | 2017 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
| Sales growth rate | 10% | 15% | -1% | 0.62% | 1% | 1% | 1% | 1% | |
| COGS (excl. depr.) / Sales | 59% | 65% | 61% | 63% | 63% | 63% | 63% | 63% | |
| Depreciation / Net PP&E | 7% | 5% | 5% | 5% | 5% | 5% | 5% | 5% | |
| Other op. exp. / Sales | 25% | 17% | 16% | 17% | 17% | 17% | 17% | 17% | |
| Other income/ Expenses | 0.00% | 0.00% | 0% | 0.00% | 0.00% | 0.00% | 0.00% | ||
| Cash / Sales | 8% | 4% | 4% | 4% | 4% | 4% | 4% | 4% | |
| Acc. rec. / Sales | 9% | 8% | 8% | 8% | 8% | 8% | 8% | 8% | |
| Inventory / Sales | 8% | 12% | 11% | 12% | 12% | 12% | 12% | 12% | |
| Other current assets | 3% | 1% | 1% | 1% | 1% | 1% | 1% | 1% | |
| Net PP&E / Sales | 65% | 74% | 74% | 74% | 74% | 74% | 74% | 74% | |
| Acc. pay. / Sales | 17% | 17% | 17% | 17% | 17% | 17% | 17% | 17% | |
| Accruals / Sales | 2% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | |
| Tax rate | 35% | 30% | 29% | 29% | 29% | 29% | 29% | 29% | |
| 2. Capital Structure | Actual Market Weights | Target Market Weights | |||||||
| % Long-term debt | 15% | 17% | 21% | 19% | 19% | 19% | 19% | 19% | |
| % Short-term debt | 8% | 5% | 6% | 6% | 6% | 6% | 6% | 6% | |
| % Preferred stock | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | |
| % Common stock | 77% | 78% | 74% | 76% | 76% | 76% | 76% | 76% | |
| 3. Costs of Capital | Forecast | ||||||||
| Rate on LT debt | 5.5% | 6% | 6% | 6% | 6% | ||||
| Rate on ST debt | 8.0% | 8% | 8% | 8% | 8% | ||||
| Rate on preferred stock (ignoring flotation costs) | 0.0% | 0% | 0% | 0% | 0% | ||||
| Cost of equity | 7.05% | 7% | 7% | 7% | 7% | ||||
| 4. Target Dividend Policy | Actual | ||||||||
| Growth rate of dividends | 4% | 11.1% | 3% | 3% | 3% | 3% | 3% | ||
| Actual Historical Financing | |||||||||
| 2016 | 2017 | ||||||||
| Long-term debt | $3,757 | $3,694 | |||||||
| Short-term debt | $1,219 | $1,037 | |||||||
| Preferred stock | $0 | $0 | |||||||
| Market value of equity = (Price x # shares) | $17,682 | $13,132 | |||||||
| Total | $22,658 | $17,863 | |||||||
| See the box to the right for calculations of the actual capital structures, based on market values, for the past two years. | Percent long-term debt | 17% | 21% | ||||||
| Percent short-term debt | 5% | 6% | |||||||
| Percent preferred stock | 0% | 0% | |||||||
| Percent market value of equity | 78% | 74% | |||||||
| Total | 100% | 100% | |||||||
| Campbell Soup's Forecast of Operations for the Selected Scenario (Millions of Dollars, Except for Per Share Data) | |||||||||
| Status Quo | Industry | Campbell Soup | Campbell Soup | ||||||
| Panel A: Inputs | Actual | Actual | Forecast | ||||||
| A1. Operating Ratios | 2017 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
| Sales growth rate | 10% | 15% | -1% | 1% | 1% | 1% | 1% | 1% | |
| COGS (excl. depr.) / Sales | 59% | 65% | 61% | 63% | 63% | 63% | 63% | 63% | |
| Depreciation / Net PP&E | 7% | 5% | 5% | 5% | 5% | 5% | 5% | 5% | |
| Other op. exp. / Sales | 25% | 17% | 16% | 17% | 17% | 17% | 17% | 17% | |
| Cash / Sales | 8% | 4% | 4% | 4% | 4% | 4% | 4% | 4% | |
| Acc. rec. / Sales | 9% | 8% | 8% | 8% | 8% | 8% | 8% | 8% | |
| Inventory / Sales | 8% | 12% | 11% | 12% | 12% | 12% | 12% | 12% | |
| Other current assets | 1% | 1% | 0.76% | 1% | 1% | 1% | 1% | ||
| Net PP&E / Sales | 65% | 74% | 74% | 74% | 74% | 74% | 74% | 74% | |
| Acc. pay. / Sales | 17% | 17% | 17% | 17% | 17% | 17% | 17% | 17% | |
| Accruals / Sales | 2% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | |
| Tax rate | 35% | 30% | 29% | 29% | 29% | 29% | 29% | 29% | |
| Panel B: Results | Actual | Forecast | |||||||
| B1. Sales Revenues | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |||
| Net sales | $7,890 | $7,939 | $7,988 | $8,038 | $8,087 | $8,138 | |||
| B2. Operating Assets and Operating Liabilities | |||||||||
| Cash | $319 | $308 | $310 | $312 | $314 | $316 | |||
| Accounts receivable | $605 | $617 | $620 | $624 | $628 | $632 | |||
| Inventories | $902 | $922 | $928 | $934 | $940 | $946 | |||
| Other current assets | $74 | $60 | $61 | $61 | $61 | $62 | |||
| Net PP&E | $5,826 | $5,887 | $5,924 | $5,961 | $5,997 | $6,035 | |||
| Accounts payable | $1,358 | $1,349 | $1,358 | $1,366 | $1,375 | $1,383 | |||
| Accruals | $0 | $0 | $0 | $0 | $0 | $0 | |||
| B3. Operating Income | |||||||||
| COGS (excl. depr.) | $4,831 | $5,013.78 | $5,045 | $5,076 | $5,108 | $5,139 | |||
| Depreciation | $318 | $314 | $316 | $317 | $319 | $321 | |||
| Other operating expenses | $1,243 | $1,317.43 | $1,326 | $1,334 | $1,342 | $1,350 | |||
| EBIT | $1,498 | $1,294 | $1,302 | $1,310 | $1,318 | $1,326 | |||
| Net operating profit after taxes | $1,059 | $914 | $919 | $925 | $931 | $936 | |||
| B4. Free Cash Flows | |||||||||
| Net operating working capital | $468 | $558 | $561 | $565 | $568 | $572 | |||
| Total operating capital | $6,294 | $6,445 | $6,485 | $6,525 | $6,566 | $6,607 | |||
| FCF = NOPAT – Δ op capital | $1,220 | $762 | $879 | $885 | $890 | $896 | |||
| B5. Estimated Intrinsic Value | |||||||||
| Target WACC | 6.4% | 6.4% | 6.4% | 6.4% | 6.4% | ||||
| Return on invested capital | 16.8% | 14.2% | 14.2% | 14.2% | 14.2% | 14.2% | |||
| Growth in FCF | 15% | 0.6% | 0.6% | 0.6% | |||||
| Horizon Value: | Value of operations | $15,060 | |||||||
| + ST &long investments | $0 | ||||||||
| = | $15,641 | Estimated total intrinsic value | $15,060 | ||||||
| − All debt | $4,731 | ||||||||
| Value of Operations: | − Preferred stock | $0 | |||||||
| Present value of HV | $11,479 | Estimated intrinsic value of equity | $10,329 | ||||||
| + Present value of FCF | $3,581 | ÷ Number of shares | $292 | ||||||
| Value of operations = | $15,060 | Estimated intrinsic stock price = | $35.39 | ||||||
Sales growth
| Sales Growth | ||||
| Year | Sales in Million | Year | annual growth | |
| 2010 | 7,676 | 2011 | 0.56% | |
| 2011 | 7,719 | 2012 | -7.05% | |
| 2012 | 7,175 | 2013 | 12.22% | |
| 2013 | 8,052 | 2014 | 0.37% | |
| 2014 | 8,082 | 2015 | -1.50% | |
| 2015 | 7,961 | 2016 | -0.89% | |
| 2016 | 7,890 | Average growth | 0.62% | |
