Discount Cash Flow Valuation

HospitalPediatricsSpreadsheet.xlsx

Ex 1_Historical

Exhibit 1
Hospital Pediatrics
Finanial Statements for Mary Washington Pediatrics
(in thousands of US dollars)
		2015	2016
	Net revenue	1,547	1,555
	Operating expenses*	882	893
	Physician salary	468	496
	Depreciation	13	10
	Operating profit	184	155
	Taxes	59	50
	Net profit	125	105
	Cash	89	106
	Accounts receivable	244	286
	Medical supplies	31	43
	Other current assets	17	24
	Total current assets	381	459
	Gross equipment	733	733
	Accumulated depreciation	397	407
	Net equipment	337	326
	Total assets	718	785
	Accounts payable	31	32
	Wages payable	126	96
	Other payables	24	15
	Total current liabilities	181	143
	Owners’ equity	537	642
* Operating expenses included office salary, medical expenses, office supplies and expenses, rent and other building expenses, and insurance costs.
Source: Created by author.

Exhibit 2
Hospital Pediatrics
Financial Ratios for Select Pediatric Practices
(financial figures in thousands of US dollars)
		Mary Washington Pediatrics	Green Hills Pediatrics	Harpeth Group
	Net revenue	1,555	2,535	3,296
	Operating profit	155	276	399
	Net profit	105	183	264
	Accounts receivable	286	361	497
	Total current assets	459	552	830
	Net equipment	326	634	646
	Total assets	785	1,186	1,476
	Total current liabilities	143	178	296
	Operating margin	10.0%	10.9%	12.1%
	Net profit margin	6.8%	7.2%	8.0%
	Total asset turnover	2.0	2.1	2.2
	Accounts receivable days	67	52	55
	Working capital turnover	4.9	6.8	6.2
	Net equipment turnover	4.8	4.0	5.1
	Return on assets	13.4%	15.4%	17.9%
Source: Created by author.

Exhibit 3
Hopsital Pediatrics
Atwood’s Financial Forecast for Mary Washington Pediatrics
(financial figures in thousands of US dollars)
		2016	2017	2018	2019	2020	2021	2022	2023
	Revenue growth	0.5%	3.0%	5.0%	5.0%	5.0%	3.0%	3.0%	2.0%
	Operating expenses/ revenue	57.4%	57.4%	57.0%	56.5%	56.0%	54.0%	53.0%	53.0%
	Net working capital	315.9	272.1	214.2	176.5	181.9	185.5	189.2	193.0
	Net equipment	326.3	375.1	415.1	455.1	475.1	498.2	484.2	464.6
	Depreciation	10.4	14.0	20.0	28.0	37.0	42.0	42.9	42.9
	Capital expenditures	4.1	62.8	60.0	68.0	57.0	65.1	28.9	23.3
	Net revenue		1,602	1,682	1,766	1,854	1,910	1,967	2,007
	Operating expenses		920	959	998	1,038	1,031	1,043	1,064
	Depreciation		14	20	28	37	42	43	43
	Physician salary		500	525	551	579	596	614	626
	Operating profit		168	178	189	200	240	268	274
	Valuation Assumptions
	Discount Rate	9%
	Tax Rate	32%
	FCF Valuation	2016	2017	2018	2019	2020	2021	2022	2023
	(1-t)*(EBIT)									211.755
	Add Depreciation
										281.4
	Sub Chng NWC
	Sub CAPX
	FCF
	TV (10.5*EBIT)
	PV of Forecast
	PV of TV
	EV

2. Taxes Avoided from Debt Financing (000's)
	Comment	2016 Value
Enterprise Value (prior page)	Prior Page
Equity Invested	Assumed
Debt Financing	Difference: EV - Equity
Reported Profit - No Debt	Prior Page
Taxes - No Debt	32%
Reported Profits - With Debt	Profits - Interest
Taxes with Debt	32%
Taxes Avoided	Taxes (ND) - Taxes (D)

Exhibit 3
Hospital Pediatrics
Atwood’s Financial Forecast for Mary Washington Pediatrics
(financial figures in thousands of US dollars)
		2016	2017	2018	2019	2020	2021	2022	2023
	Revenue growth	0.5%	3.0%	5.0%	5.0%	5.0%	3.0%	3.0%	2.0%
	Operating expenses/ revenue	57.4%	57.4%
	Net working capital	315.9	272.1	214.2	176.5	181.9	185.5	189.2	193.0
	Net equipment	326.3	375.1	415.1	455.1	475.1	498.2	484.2	464.6
	Depreciation	10.4	14.0	20.0	28.0	37.0	42.0	42.9	42.9
	Capital expenditures	4.1	62.8	60.0	68.0	57.0	65.1	28.9	23.3
	Net revenue		1,602	1,682	1,766	1,854	1,910	1,967	2,007
	Operating expenses		920	0	0	0	0	0	0
	Depreciation		14	20	28	37	42	43	43
	Physician salary		500	525	551	579	596	614	626
	Operating profit		168	1,137	1,187	1,239	1,272	1,310	1,337
	Valuation Assumptions
	Discount Rate	9%
	Tax Rate	32%
	FCF Valuation	2016	2017.0	2018	2019	2020	2021	2022	2023
	(1-t)*(EBIT)
	Add Depreciation
	Sub Chng NWC
	Sub CAPX
	FCF
	TV (10.5*EBIT)
	PV of Forecast	$0.00
	PV of TV	0
	EV	$0.00

	Opening Bid
	Justification