BAFI355 Final Formulas

Revenue

Previous Year * (1 + Growth Rate)

Cost of Goods Sold

Vertical Analysis for previous years by doing COGS/Revenue. Take the percentage and multiply by the projected year Revenue.

Gross Profit

Revenue - COGS

SG&A Expenses

Calculate vertical analysis for previous year by doing SG&A Expenses/Revenue. Take the percentage and multiply by projected year Revenue

Depreciation

Usually given

Operating Profit

Gross Profit - SG&A Expenses - Depreciation

Interest Expense

Interest Rate * (Current Maturities + Long-term Debt)

Pre-tax Income

Operating Profit - Interest Expense

Tax Expense

Tax Rate * Pre-Tax Income

Tax Rate

Stays consistent, so calculate the tax rate of given years with Tax Expense/Pre-Tax Income

Interest Rate

Stays consistent, so calculate the interest rate of given years with Interest Expense/ (Current Maturities + Long-term Debt)

Cash

should be calculated last as the plug value | Ending Total Liabilities and Equity - (Accounts Receivable + Inventory + Other Current Assets + PP&E)

Accounts Receivable (DSO Approach)

Calculate DSO. Then, do (DSO*Revenue)/265

Inventory

First, calculate DIO. Then, do (DIO*COGS)/365

Other Current Assets

Calculate percentage of sales for previous year by doing Other Current Assets/Assets. Take the percentage and multiply by projected year Revenue

Current Assets

Cash + Accounts Receivable + Inventory + Other Current Assets

Net PP&E

Take the PP&E total of the previous year and subtract the projected year Depreciation expense

Total Assets

Current Assets + Net PP&E

Current Maturities

Same as previous year unless stated otherwise

Accounts Payable (DPO Approach)

(DPO*COGS)/365

Accrued Expenses

Calculate vertical analysis for previous year Accrued Expenses. Multiply percentage by projected year Revenue

Other Current Liabilities

Calculate vertical analysis for previous year Other Current Liabilities. Multiply percentage by projected year Revenue

Current LIabilities

Current Maturities + Accounts Payable + Accrued Expenses + Other Current Liabilities

Long-term Debt

Previous Year Long-term Debt - Current Maturities

Owner’s Equity

Previous Year Owner’s Equity + Projected Year Net Profit

Total Liabilities and Equity

Current Laibilitis + Long-term Debt + Owner’s Equity

Cash Balance Target

Cash Target Balance Percentage * Revenue

Forecast Cash Balance

Cash amount on balance sheet

External Financing Need

Cash Balance Target + Forecast Cash Balance

Net Income

Net Profit

Change in Asset Accounts

-(Ending - Beginning)

Change in Liability Accounts

Ending - Beginning

Change in Net Working Capital

Change in Asset Accounts + Change in Liability Accounts

Capital Expenditures

Change in net PP&E + Depreciation or actual CapEx for the year

Change in Long-term Debt

Ending - Beginning

Cash used in Financing Activities’

Change in Long-term Debt + DIvidends

Change in Cash

Cash from Operations - Cash used in Investing Activities + Cash used in Financing Activities

Terminal Value (in year x)

UFCFs in Year x * (1+Terminal Growth Rate)/(Discount Rate - Terminal Growth Rate)

Present Value of Terminal Value

Terminal Value in Year x/(1+Discount Rate)^Year x

Implied Enterprise Value

Present Value of Terminal Value + Sum of Present Value of UFCFs

Implied Equity Value

Implied Enterprise Value (EV) - Total Debt + Cash and Cash Equivalents

Implied Share Price

Implied Equity Value / Shares Outstandng