Capital Budgeting

profilehazem28
group_project_-_hershey.xlsx
Home>Business & Finance homework help>Capital Budgeting

Analysis

HISTORICAL VIEW – FORECAST – RESIDUAL PERIOD 1 2 3 4 5 ESTIMATE CORPORATE VALUE
THE HERSHEY COMPANY Historical Forecast Residual
BALANCE SHEETS 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 PV of Forecast 5,378,245 16.8% FCF = 20% for first 5 years
(in thousands, except share data) Revenue 5,671,009 6,080,788 6,644,252 7,146,079 7,421,768 7,792,856 8,221,464 8,714,751 9,281,210 9,930,895 10,104,686 PV of Residual or Terminal Value 26,569,593 83.2% FCF = 80% for the future
December 31, 2010 2011 2012 2013 2014 COGS 4,765,711 5,025,760 5,533,104 5,806,404 6,032,193 6,331,465 6,589,259 7,071,762 7,717,051 8,157,936 8,199,653 PV of All Future Cash Flows 31,947,838
ASSETS EBIT 905,298 1,055,028 1,111,148 1,339,675 1,389,575 1,461,392 1,632,204 1,642,989 1,564,159 1,772,959 1,905,033 Cash and Marketable Securies 471,985
Current assets: Taxes 299,065 333,883 354,648 430,849 459,131 514,848 575,026 578,825 551,053 624,614 671,143 Corporate Value 32,419,823
Cash and cash equivalents 884,642 693,686 728,272 1,118,508 374,854 EBT 808,864 962,845 1,015,579 1,251,319 1,306,043 946,543 1,057,179 1,064,164 1,013,106 1,148,346 1,233,890 Value of Debt 22,480,000,000
Short-term investments 97,131 Implied Taxes 334,720 365,849 388,021 461,271 488,496 514,848 575,026 578,825 551,053 624,614 671,143 Value of Equity Holders 22,447,580,177
Accounts receivable—trade, net 390,061 399,499 461,383 477,912 596,940 NOPAT 570,578 689,179 723,127 878,404 901,079 946,543 1,057,179 1,064,164 1,013,106 1,148,346 1,233,890 Value per Equity Share 101.64
Inventories 533,622 648,953 633,262 659,541 801,036 Depreciation 215,763 210,037 201,033 211,532 209,591 209,591 209,591 209,591 209,591 209,591
Deferred income taxes 55,760 136,861 122,224 52,511 100,515 Fixed + WC Investment (10,652) (64,673) 115,697 (902,030) 47,327 74,003 31,925 (81,048) 45,934 74,459
Prepaid expenses and other 141,132 167,559 168,344 178,862 276,571 FCF 894,290 868,491 1,195,134 210,581 1,203,462 1,340,772 1,305,680 1,141,649 1,403,871 1,517,940
Total current assets 2,005,217 2,046,558 2,113,485 2,487,334 2,247,047 PV 1,135,341 1,193,283 1,096,274 904,293 1,049,054 26,569,593
Property, plant and equipment, net 1,437,702 1,559,717 1,674,071 1,805,345 2,151,901
Goodwill 524,134 516,745 588,003 576,561 792,955 ROIC > WACC –> GROWTH MODEL
Other intangibles 123,080 111,913 214,713 195,244 294,841 Value Drivers Historical Forecast Residual
Deferred income taxes 21,387 33,439 12,448 2011 2012 2013 2014 2015 2016 2017 2018 2019
Other assets 161,212 138,722 152,119 293,004 142,772 Sales Growth 6.57% 6.74% 8.48% 7.02% 3.71% 5.00% 5.50% 6.00% 6.50% 7.00% 7.00% 6.50%
Total assets 4,272,732 4,407,094 4,754,839 5,357,488 5,629,516 Operating Profit Margin 15.96% 17.35% 16.72% 18.75% 18.72% 18.75% 19.9% 18.9% 16.9% 17.9% 18.9% 17.50%
Effective Tax Rate 36.97% 34.68% 34.92% 34.43% 35.15% 35.2% 35.2% 35.2% 35.2% 35.2% 35.2% 35.23%
LIABILITIES AND STOCKHOLDERS’ EQUITY Investment Rate
Christiane Russ: Christiane Russ: Working Capital supports higher level of sales Fixed Capital - drive incremental sales 		1.5%
Christiane Russ: Christiane Russ: dependent on FC + WC Investments which may differ... 		8.9% -13.2% 100.1% 5.0% 7.0% 3.0% -8.0% 4.0% 24.36%
Current liabilities: Cost of Capital (WACC) 6.02% 6.02% 6.02% 6.02% 6.02% 6.02% 6.02% 6.02%
Accounts payable 410,655 420,017 441,977 461,514 482,017 ROIC 25.26% 27.46% 26.89% 27.66% estimated 29.00% 26.82%
Accrued liabilities 593,308 612,186 650,906 699,722 813,513 Spread (ROIC – WACC) 22.98%
Accrued income taxes 9,402 1,899 2,329 79,911 4,616 Residual Growth estimatd 1.75%
Short-term debt 24,088 42,080 118,164 165,961 384,696 Residual Investment Rate calculated 6.034% IR = G/ROIC
Current portion of long-term debt 261,392 97,593 257,734 914 250,805
Total current liabilities 1,298,845 1,173,775 1,471,110 1,408,022 1,935,647
Long-term debt 1,541,825 1,748,500 1,530,967 1,795,142 1,548,963 FIXED AND WORKING CAPITAL – ROIC
Other long-term liabilities 494,461 603,876 668,732 434,068 526,003
Deferred income taxes 3,335,131 35,657 104,204 99,373 Change in Invested Assets 2011 2012 2013 2014
Total liabilities 3,539,551 3,706,466 3,741,436 4,109,986 Net Operating Working Capital
Stockholders’ equity: Accounts Receivable (9,438) (61,884) (16,529) (119,028)
The Hershey Company stockholders’ equity Inventory (115,331) 15,691 (26,279) (141,495)
Preferred stock, shares issued: none Prepaid (26,427) (785) (10,518) (97,709)
Common stock, shares issued: 299,195 299,269 299,272 299,281 299,281 Accounts Payable 9,362 21,960 19,537 20,503
Class B common stock, shares issued: 60,706 60,632 60,629 60,620 60,620 Accrual 18,878 38,720 48,816 113,791
Additional paid-in capital 434,865 490,817 592,975 664,944 754,186 Total Change in WC (122,956) 13,702 15,027 (223,938)
Retained earnings 4,374,718 4,707,892 5,027,617 5,454,286 5,860,784 Fixed Assets
Treasury—common stock shares, at cost: 138,856,786 in 2014 and 136,007,023 in 2013 (4,052,101) (4,258,962) (4,558,668) (4,707,730) (5,161,236) PPE (122,015) (114,354) (131,274) (346,556)
Accumulated other comprehensive loss (215,067) (442,331) (385,076) (166,567) (358,573) Goodwill 7,389 (71,258) 11,442 (216,394)
The Hershey Company stockholders’ equity 902,316 849,022 1,036,749 1,604,834 1,455,062 Other intangibles 11,167 (102,800) 19,469 (99,597)
Noncontrolling interests in subsidiaries 35,285 23,626 11,624 11,218 64,468 Depreciation 215,763 210,037 201,033 211,532
Total stockholders’ equity 937,601 880,943 1,048,373 1,616,052 1,519,530 Total Change in Fixed Assets 112,304 (78,375) 100,670 (451,015)
Total liabilities and stockholders’ equity 4,272,732 4,407,094 4,754,839 5,357,488 5,629,516 Total Invested Assets (10,652) (64,673) 115,697 (902,030)
STATEMENTS OF INCOME Operating Assets for ROIC 2010 2011 2012 2013 2014
For the years ended December 31, 2011 2012 2013 2014 Net Operating Working Capital
Net sales 6,080,788 6,644,252 7,146,079 7,421,768 Accounts Receivable 390,061 399,499 461,383 477,912 596,940
Costs and expenses: Inventory 533,622 648,953 633,262 659,541 801,036
Cost of sales 3,548,896 3,784,370 3,865,231 4,085,602 Prepaid 141,132 167,559 168,344 178,862 276,571
Selling, marketing and administrative 1,477,750 1,703,796 1,922,508 1,900,970 Accounts Payable (410,655) (420,017) (441,977) (461,514) (482,017)
Business realignment and impairment charges (886) 44,938 18,665 45,621 Accrual (593,308) (612,186) (650,906) (699,722) (813,513)
Total costs and expenses 5,025,760 5,533,104 5,806,404 6,032,193 Total WC 60,852 183,808 170,106 155,079 379,017
EBIT Income before interest and income taxes 1,055,028 1,111,148 1,339,675 1,389,575 Fixed Assets
Interest expense, net 92,183 95,569 88,356 83,532 PPE 1,437,702 1,559,717 1,674,071 1,805,345 2,151,901
EBT Income before income taxes 962,845 1,015,579 1,251,319 1,306,043 Goodwill 524,134 516,745 588,003 576,561 792,955
Provision for income taxes 333,883 354,648 430,849 459,131 Other intangibles 123,080 111,913 214,713 195,244 294,841
Net income 628,962 660,931 820,470 846,912 Total Fixed Assets 2,084,916 2,188,375 2,476,787 2,577,150 3,239,697
Total Operating Assets 2,145,768 2,372,183 2,646,893 2,732,229 3,618,714
Net income per share - basic:
Common stock 2.85 3.01 3.76 3.91 ROIC using Beg. Invested Assets 2011 2012 2013 2014
Classic B common stock 2.58 2.73 3.39 3.54 NOPAT 570,578 689,179 723,127 878,404
Invested Assets - Beg 2,145,768 2,372,183 2,646,893 2,732,229
Net income per share - diluted: ROIC (Beg Invested Assets) 27% 29% 27% 32%
Common stock 2.74 2.89 3.61 3.77
Class B common stock 2.56 2.71 3.37 3.52 ROIC using Avg Invested Assets
NOPAT 570,578 689,179 723,127 878,404
Dividends paid per share: Invested Assets - Beg 2,145,768 2,372,183 2,646,893 2,732,229
Common stock 1.38 1.56 1.81 2.04 Invested Assets - End 2,372,183 2,646,893 2,732,229 3,618,714
Class B common stock 1.25 1.41 1.63 1.84 Invested Assets - Avg 2,258,976 2,509,538 2,689,561 3,175,472
ROIC (Avg Invested Assets) 25.26% 27.46% 26.89% 27.66%
CASH FLOWS WACC - CAPM
LIABILITIES AND STOCKHOLDERS’ EQUITY Book Value Market Value
For the years ended December 31, 2011 2012 2013 2014 Current liabilities: Debt
Christiane Russ: Christiane Russ: what contributes to the debt equipment?... 		2,325,771 2,325,771 101.79 price per share bonds, long-term notes payable, current portion of long term debt, notes payable (the footnotes tell you more about how much debt is short term...)
Operating Activities Accounts payable (Verbindlichkeiten) 482,017 8.6% Equity 1,519,530 22,480,000,000 220,846,842 shares outstanding common stock, preferred stock, retained earnings≠ shares outstanding = 10K or annual report
Net income 628,962 660,931 820,470 846,912 Accrued liabilities (Rückstellungen) 813,513 14.5% Total Debt and Equity 3,845,301 22,482,325,771 no accounts payable - no working capital
Adjustments to reconcile net income to net cash provided from operations: Accrued income taxes (Steuerrückstellungen, aktive Rechnungsabrenzung) 4,616 0.1%
Depreciation and amortization 215,763 210,037 201,033 211,532 Short-term debt (kurzfristige Fremdfinanzierung)
Christiane Russ: Christiane Russ:s		 384,696 6.8% Capital structure of debt 60.48% 0.010%
Stock-based compensation expense 43,468 50,482 53,967 54,068 Current portion of long-term debt (actuelle langfristige Fremdfinanzierung/Verbindlichkeiten) 250,805 4.5% Capital structure of equity 39.52% 99.99%
Excess tax benefits from stock-based compensation (13,997) (33,876) (48,396) (53,497) Total current liabilities (Gesamtverbindlichkeiten= 1,935,647 34.4% Total 100.00% 100.00%
Deferred income taxes 33,611 13,785 7,457 18,796 Long-term debt (langfristige Fremdfinanzierung) 1,548,963 27.5%
Non-cash business realignment and impairment charges 34,660 38,144 39,988 Other long-term liabilities 526,003 9.3%
Contributions to pension and other benefits plans (31,671) (44,208) (57,213) (53,110) Deferred income taxes 99,373 1.8% DEBT Moody S&P http://finra-markets.morningstar.com/BondCenter/Results.jsp
Changes in assets and liabilities, net of effects from business acquisitions and divestitures: Total liabilities 4,109,986 73.0% Credit rating (Moody AA) 20Y 3.56%
Christiane Russ: Christiane Russ: 20YR
Christiane Russ: Christiane Russ: what contributes to the debt equipment?...
Christiane Russ: Christiane Russ:s
Christiane Russ: Christiane Russ: Working Capital supports higher level of sales Fixed Capital - drive incremental sales
Christiane Russ: Christiane Russ: dependent on FC + WC Investments which may differ... 		3.56% AA A https://www.moodys.com/research/Moodys-Disclosures-on-Credit-Ratings-of-The-Hershey-Company--PR_238214
Accounts receivable—trade, net (9,438) (50,470) (16,529) (67,464) Stockholders’ equity: Tax rate 35.15% 35.15% http://www.bondsonline.com/Todays_Market/Composite_Bond_Yields_table.php
Inventories (115,331) 26,598 (26,279) (88,497) The Hershey Company stockholders’ equity After tax cost of debt rd(1-T) 2.31% 2.31%
Accounts payable and accrued liabilities 7,860 69,645 102,411 (13,847) Preferred stock (Vorzugsaktie)
Other assets and liabilities (194,948) 153,759 151,484 (56,660) Common stock (Stammaktien) 299,281 5.3%
Net cash provided by operating activities 587,867 1,094,827 1,188,405 838,221 Class B common stock, shares issued: 60,620 1.1% Equity
Investing Activities Capital surplus (Kapitalrücklage, Eigenkapitalzuwachs aus sonstigen Quellen) 754,186 13.4% RF (10YR) 2.49% 2.49% retrieved from http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2015
Capital additions (323,961) (258,727) (323,551) (345,947) Retained earnings (Gewinnrücklagen) 5,860,784 104.1% β current beta <1 = more stable (1 = price moves with market) 0.64 64.00% retrieved from http://finance.yahoo.com/echarts?s=HSY+Interactive#symbol=HSY;range=
Capitalized software additions (23,606) (19,239) (27,360) (24,842) Treasury—common stock shares, at cost: (eigene Anteile) (5,161,236) -91.7% Expected return 8.00% 8.00%
Proceeds from sales of property, plant and equipment 312 453 15,331 1,612 Accumulated other comprehensive loss (akkumulierter umfassender Verlust) (358,573) -6.4%
Proceeds from sale of trademark licensing rights 20,000 The Hershey Company stockholders’ equity (Eigenkapital) 1,455,062 25.8% MRP = expected return – risk free rate 5.51% 5.51%
Loan to affiliate (7,000) (23,000) (16,000) Noncontrolling interests in subsidiaries 64,468 1.1% Re(1-t) 3.90% 3.90%
Business acquisitions, net of cash and cash equivalents acquired (5,750) (172,856) (396,265) Total stockholders’ equity 1,519,530 27.0% CAPM = re = RF + β (MRP) 6.0164% 6.0164% (Captial Asset Pricing Model CAPM = Risk free rate RF + Beta (MRP) + Bond Yield Premium)
Total liabilities and stockholders’ equity 5,629,516 100.0% WACC 3.2829% 6.0159% WACC = E/V * Re + D/V *Rd * (1-Tc)
Net cash used in investing activities (340,005) (473,369) (351,580) (862,573)
Financing Activities
Net increase in short-term debt 10,834 77,698 54,351 117,515
Long-term borrowings 249,126 4,025 250,595 3,051
Repayment of long-term debt (256,189) (99,381) (250,761) (1,442)
Proceeds from lease financing agreement 47,601
Cash dividends paid (304,083) (341,206) (393,801) (440,414)
Exercise of stock options 184,411 261,597 147,255 122,306
Excess tax benefits from stock-based compensation 13,997 33,876 48,396 53,497
Payments to noncontrolling interests (15,791) WACC = E/V * Re + D/V *Rd * (1-Tc)
Contributions from noncontrolling interests 2,940 2,940 2,940 Re = cost of equity
Repurchase of common stock (384,515) (510,630) (305,564) (576,755) Rd = cost of debt
Net cash used in financing activities (438,818) (586,872) (446,589) (719,302) E = market value of the firm's equity
(Decrease) increase in cash and cash equivalents (190,956) 34,586 390,236 (743,654) D = market value of the firm's debt
Cash and cash equivalents at January 1 884,642 693,686 728,272 1,118,508 V = E + D
Cash and cash equivalents at December 31 693,686 728,272 1,118,508 374,854 E/V = percentage of financing that is equity
Supplemental Disclosure D/V = percentage of financing that is debt
Interest paid 97,892 100,269 92,551 87,801 Tc = corporate tax rate
Income taxes paid 292,315 327,230 373,902 384,318
capital sources = common stock, preferred stock, bonds, other long-term debt
WACC increases when beta and return on equity increases
Operating Activities 2012 2013 2014 WACC increase notes a decrease in valuation and higher risk
Net Income BEFORE preferred dividends 660,931 820,470 846,912 Tells you how much interest a company has to pay for every dollar it finances
Noncash adjustments Used as the discount rate to estimate PV of future cash flows
Depreciation and amortizationa 210,037 201,033 211,532 equity = assets - liability
Working capital adjustments equity holders: owner of the company, shareholder
Increase in accounts receivableb (61,884) (16,529) (119,028) common share: no guarantee of dividends
Increase in inventories 15,691 (26,279) (141,495) preferred shareholders: get a certain amount of dividends per year
Increase in accounts payable 21,960 19,537 20,503 equity sources: net profits that end in retained earnings, issuing of shares
Increase in accruals 38,720 48,816 113,791
Net cash provided (used) by operating activities 885,455 1,047,048 932,215
Investing Activities
Cash used to acquire fixed assetsc (276,964) (574,882) 28,755
Sale of short-term investments - 0 - 0 (97,131)
Net cash provided (used) by investing activities (276,964) (574,882) (68,376)
Financing Activities
Increase in notes payable
Increase in bonds
Payment of common and preferred dividends
Net cash provided (used) by financing activities
Summary
Net change in cash and equivalents
Cash and securities at beginning of the year
Cash and securities at end of the year
Hershey Mars Inc Mondelez International Nestlé SA
TOTAL REVENUE 7,421,768 815,000 8,830,000 91,610,000
COST 4,085,602 467,000 5,684,000 47,550,000
GROSS PROFIT 3,336,166 349,000 3,146,000 44,060,000
EBIT 1,389,575 69,000 589,000 (2,760,000)
NET INCOME 846,912 (51,000) 500,000 14,460,000
Company Net Sales 2014 (US$ millions)
Mars Inc (USA) 18,480
Mondelēz International (USA) 14,350
Ferrero Group (Luxembourg / Italy) 10,911
Nestlé SA (Switzerland) 10,466
Meiji Co Ltd (Japan) 9,818*
Hershey Foods Corp (USA) 7,485
Chocoladenfabriken Lindt & Sprüngli AG (Switzerland) 4,022
Arcor (Argentina) 3,500*
Ezaki Glico Co Ltd (Japan) 3,049*
August Storck KG (Germany) 2,272

notes

WACC used to find PV of future cash flows – therefore we should not use weights based on past history of the company
includes capital provided by investors – interst bearing debt, preferred stock, and common equity
liabilities and equity from BS
percentage of total liabilites and equity comprised by (beinhalted in) each l. or e. account
book values (BS) and % of financing from investor-supplied capital
current market values and % of financing from investor-supplied capital
target capital structure weights (future average capital structure weights based on market values)
exclude from capital structure weights
accounts payable
accruals
WACC used to find PV of future cash flows – therefore we should not use weights based on past history of the company
includes capital provided by investors – interst bearing debt, preferred stock, and common equity
Choose weights for WACC liabilities and equity from BS
percentage of total liabilites and equity comprised by (beinhalted in) each l. or e. account
book values (BS) and % of financing from investor-supplied capital
current market values and % of financing from investor-supplied capital
target capital structure weights (future average capital structure weights based on market values)
exclude from capital structure weights
accounts payable
accruals
rd(1-T) and rstd(1-T): After-tax Cost of Debt
rstd - before-tax cost of short term debt
include short-term debt only if permanent source of financing - which is the case here
WACC = E/V * Re + D/V *Rd * (1-Tc)
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate
capital sources = common stock, preferred stock, bonds, other long-term debt
WACC increases when beta and return on equity increases
WACC increase notes a decrease in valuation and higher risk
Tells you how much interest a company has to pay for every dollar it finances
Used as the discount rate to estimate PV of future cash flows
equity = assets - liability
equity holders: owner of the company, shareholder
common share: no guarantee of dividends
preferred shareholders: get a certain amount of dividends per year
equity sources: net profits that end in retained earnings, issuing of shares
PROJECT 2
Pick an industry and company with less revenue than 1B a year
public company
annual revenue < 1B
potential buyer is a company in that industry
today next time übernächste week
project Cost of Capital Chapter 6 presentations
case questions Section 4.2 project risk analysis
valuation (forecast, res. Value)
Working Capital
Forecast
2014 1 2 3 4 5
Revenue
1,000 1,100 1,200 1,300 1,400 1,500 How much working capital do I need to support this revenue growth? For example inventory
Cash 250M
Cash of Working Capital - you have to guess - make analysis
10 11 12
1%
Inventory
50 55
5.0% 5%
When do I invest the 5% ?
MC Caset Consulting
3 GROWTH MODELS
no growth g = 0 in year 6 and beyond ROIC = WACC NOPAT - IR = FCF NOPAT = FCF NOPAT NOPAT
- IR +DEPR 50 IR = Investment Rate
negative growth (harvesting) g = neg ROIC = WACC = FCF - New PPE -50
= FCF
growth g = positive ROIC > WACC We are here with Hershey
We estimate g and calculate growth
WACC = 8% growth = IR * ROIC
growth rate is dependend on how much money I invest and how efficient I do it
ROIC is to assess if we are making money or not and to find out whether we are creating value for shareholders (WACC) IR ROIC Growth rate - this is what we have to estimate in advance
Therefore the assumption is ROIC = WACC 0.10 0.2 2.0%
0.10 0.3 3.0%
0.10 0.08 0.8%
0.40 0.08 3.2%
IR = G/ROIC we have to calculate the IR!!!
Forecast Residual Period or Terminal Value
2014 1 2 3 4 5 6 ...infinity
PV = FV/(1*i)^N
FCF
1,500 1,500 infinity
PV0 = PMT1 in one year / i-g
i = WACC
no growth 18,750
harvesting 15,000 careful with + and - between growth and interest rate
growth 30,000
WACC 80% Debt current portion of long term debt, notes payable (the footnotes tell you more about how much debt is short term...)
20% Equity ≠ shares outstanding = 10K or annual report
Assumptions current stock price
Current Capital Structure is the target or optimal capital structure no accounts payable - no working capital Debt 3.5 14%
Don't need historical capital structure Equity 21.5 86%
Market value not book value Total 25
CAPM
re = RF + B(MRP) MRP = E(RM) - RF
RF = 10 Year treasury bond =2.1%
B = Beta = draw them from bloomberg, etc. (or calculate it yourself)
when beta is 0.2 it is too low
put all betas from google, morningstar, yahoo, into the presentation and say which one you picked
MRP = Market risk premium 5%
E(RM) = 7.1 Return of the market
RF = 2.1
= MRP = 5%
Cost of Debt
we want to find out what the cost of new debt
What is the company's credit rating. Bondsonline.com - or finra
http://finra-markets.morningstar.com/BondCenter/Results.jsp
WACC = (1 - Tax rate)* rd cost of debt + %D percentage of debt + re%E percentage of Equity
T = FCF
Where:
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate
Fixed Capital 1. Historical Free Cash Flows
New Equipment FCF 3 years
Acquisitions annual report of the 10k
Depreciation Income Statement
Change in Fixed Capital Revenue 3084370
costs 2730415
Working Capital EBIT 353955
Accounts Receivable interest expense find it out the tax rate
Inventory Taxes 138770 taxes paid / earnings before taxes EBT provision for income taxes / income before income taxes
Prepaids 39.21%
Accounts Payable NOPAT 215185 more stores, you need more equipment, more inventory, look for change in fixed capital and change in working capital
Accruels
Change in Working Capital Change in fixed capital -79359 Fixed Capital – new equipment statement of cash flows -140528 statement of cash flows
– new acquisitions purchases of equipment, businesses, -10924 purchases of equipment, businesses,
working capital -101852 + add back depreciation depreciation and amortization 72093 depreciation and amortization they spend more money than they have depreciation expense which means that they want to grow
-79359
FCF 33974 working capital HR -69883 up use balance sheet
Current assets – current liabilities Inventory prepaid -67708 up use source of cash or use of cash??
Prepaid -23189 up use
Accounts payable 44976 up source someone else is paying for business
Accruals 13952 up source
-101852
ROIC Cash 245,686 593,175 347,489
NOPAT Which accounts? Acc rec 69,883 279,835 209,952
Invested Assets Beginnin How much did they change bye? Inventories 67,708 536,714 469,006
Invested Assets End Was it a use or a source? Prepaid 23,190 87,177 63,987
Invested Assets AVG Who is paying for the business?
0.8 0.2