Corporate Finance

 

Company Valuation

Fley Airline Supply is trading at $15/share but you think that price may not be right.

You have the following data and you want to use it to calculate its share price:

Gross Sales

$124M

COGS

54% of sales

General & Admin

$3.5M

Annual Sales Growth Rate

3.0%

Advertising, Promotion & Selling

$5M

Yearly Inflation for non-COGS expenses

3.3%

Tax Rate

21%

Discount Rate

8%

Cash Balance

$3M

Debt

$5M

Share o/s

$44M

Cash Flow Adjustment

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Working Capital

2.0

(2.0)

(1.2)

(0.3)

(1.0)

(2.0)

Capital Expenditures

(2.0)

(2.0)

(3.0)

(4.0)

(4.0)

(4.0)

Calculate the per share price and run sensitivities for growth rates of 3.0%, 3.5%, and 4% as well as discount rates of 8%, 9%, and 10%. Put these in a matrix.