Start here Relative Valuation

Document Sample
Start here Relative Valuation Powered By Docstoc
					                              Brand Name     Generic Company
Market value of Equity           98160              949
Debt                              7178            344.7
Cash                              6707             26.6
Enterprise Value                 98631           1267.1
Sales                            21962             1646
EBITDA                            7760            186.2
Capital Invested                 16406            775.4

EV/Sales                         4.49          0.769805589
EV/EBITDA                       12.71          6.805048335
EV/Capital Invested              6.01          1.634124323

                                          Value of brand name
                         Brand Company Input
Sales                           21962         81724.52965
EBITDA                           7760         45823.82492
Capital Invested                16406         71821.55636
                                      No      Brand
                             Brand Name brand name Name Value
Current Tax Rate =                   40.00%           40.00%                  (in percent)
Current Revenues =                $21,962.00        $21,962.00                (in $)
                                   debt and equity) $16,406.00
Capital Invested (Book values of $16,406.00
High Growth Period
Length of high-growth period (n) = 10                    10                   (Number of periods)
Reinvestment Rate (as % of EBIT(1-t)) =50%              50%
Return on capital (After-tax) =      20.84%            7.65%
Growth rate during period (g) = 10.42%                 3.83%                  (in percent)
Cost of Equity during period =        8.00%            8.00%                  (in percent)
After-tax Cost of Debt =              2.88%            2.88%                  (in percent)   Cost of Capital =
Debt Ratio (D / (D + E)) =            6.81%            6.81%                  (in percent)
Stable Growth Period
Growth rate in steady state =         4.00%            4.00%                  (in percent)
Return on capital in steady state = 7.65%              7.65%
Reinvestment Rate in Stable growth = 52.28%           52.28%
Cost of Equity in steady state =      8.00%            8.00%                  (in percent)
After-tax Cost of Debt =              2.88%            2.88%                  (in percent)
Debt Ratio (D / (D + E)) =            6.81%            6.81%                  (in percent)   Cost of capital =

Value of Firm =                  $79,620.29       $17,053.55     $62,566.73
 7.65%     7.65%




7.6511%   7.6511%
                                      Brand Name GenericBrand Name Value
Current Tax Rate =                          40.00%       40.00%                  (in percent)
Current Revenues =                        $21,962.00   $21,962.00                (in $)
                                          $16,406.00
Capital Invested (Book values of debt and equity)      $16,406.00
High Growth Period
Length of high-growth period (n) =             10          10                    (Number of periods)
Reinvestment Rate (as % of EBIT(1-t)) =       50%       50.00%
Return on capital (After-tax) =             20.84%       9.20%
Growth rate during period (g) =             10.42%       4.60%                   (in percent)
Cost of Equity during period =               8.00%       8.00%                   (in percent)
After-tax Cost of Debt =                     2.88%       2.88%                   (in percent)
Debt Ratio (D / (D + E)) =                   6.81%       6.81%                   (in percent)
Stable Growth Period
Growth rate in steady state =                4.00%       4.00%                   (in percent)
Return on capital in steady state =          7.65%       7.65%
Reinvestment Rate in Stable growth =        52.28%      52.28%
Cost of Equity in steady state =             8.00%       8.00%                   (in percent)
After-tax Cost of Debt =                     2.88%       2.88%                   (in percent)
Debt Ratio (D / (D + E)) =                   6.81%       6.81%                   (in percent)

Value of Firm =                          $79,611.25    $21,854.65   $57,756.60
Number of periods)




             Cost of Capital =    7.65%     7.65%




             Cost of capital =   7.6511%   7.6511%
                                         G     Brand Name Value
                                Brand Name eneric
Current Tax Rate =                    40.00%        40.00%                 (in percent)
Current Revenues =                  $21,962.00      #######                (in $)
                                    $16,406.00
Capital Invested (Book values of debt and equity)   #######
High Growth Period
Length of high-growth period (n) =       10            10                  (Number of periods)
                                        =
Reinvestment Rate (as % of EBIT(1-t)) 50%             50%
Return on capital (After-tax) =       20.84%        11.20%
Growth rate during period (g) =      10.4194%        5.60%                 (in percent)
Cost of Equity during period =         8.00%         8.00%                 (in percent)
After-tax Cost of Debt =               2.88%         2.88%                 (in percent)    Cost of Capital =
Debt Ratio (D / (D + E)) =             6.81%         6.81%                 (in percent)
Stable Growth Period
Growth rate in steady state =          4.00%         4.00%                 (in percent)
Return on capital in steady state =    7.65%         7.65%
Reinvestment Rate in Stable growth = 52.28%         52.28%
Cost of Equity in steady state =       8.00%         8.00%                 (in percent)
After-tax Cost of Debt =               2.88%         2.88%                 (in percent)
Debt Ratio (D / (D + E)) =             6.81%         6.81%                 (in percent)    Cost of capital =

Value of Firm =                    $79,611.25       #######   $50,728.15
 7.65% 7.65%




7.6511% #####
                                                    Firm Value Multiples



                                   Brand Name Company Generic Brand Name Value
Current Tax Rate =                         40.00%                  40.00%                (in percent)
Current Revenues =                        $21,962.00           $21,962.00                (in $)
High Growth Period

Length of high-growth period (n) =            10                     10                  (Number of periods)
Reinvestment Rate (as % of EBIT(1-t)) =      50%                    50%
Operating Margin (after-tax)               15.57%                  5.28%
Sales/Capital (Turnover ratio)               1.34                   1.34
Growth rate during period (g) =            10.42%                  3.53%                 (in percent)
Cost of Equity during period =              8.00%                  8.00%                 (in percent)
After-tax Cost of Debt =                    2.88%                  2.88%                 (in percent)
Debt Ratio (D / (D + E)) =                  6.81%                  6.81%                 (in percent)
Stable Growth Period

Growth rate in steady state =               4.00%                  4.00%                 (in percent)
Return on capital in steady state =         7.65%                  7.65%
Reinvestment Rate in Stable growth =       52.28%                  52.28%
Cost of Equity in steady state =            8.00%                  8.00%                 (in percent)
After-tax Cost of Debt =                    2.88%                  2.88%                 (in percent)
Debt Ratio (D / (D + E)) =                  6.81%                  6.81%                 (in percent)


Value of Firm =                           $79,611.25           $15,371.24   $64,240.01




                                                          Page 8
                                                               Firm Value Multiples




umber of periods)




                                  Brand Name Generic
              Return on Capital =      20.84%          7.06%


              Cost of Capital =         7.65%          7.65%




              Cost of capital =       7.6511%     7.6511%




                                                                     Page 9