FV calculator by Gergo86

VIEWS: 109 PAGES: 11

                      AN INTUITION BUILDING TOOL

Choose Your Sector:
 Corporate Real Estate
 Corporate Real Estate                             Input Your Data
 Healthcare (For-Profit)
 Healthcare (For-Profit)
 Healthcare (Not For-Profit)
 Healthcare (Not For-Profit)                              OR
 Retail                                            Go To Calculator

                               View Instructions
                  Calculate the Impact of Improved Energy Performance
                           On Your Company's Financial Value

 As someone in business, you know that the desire to increase earnings drives your company. You can increase earnings by reducing
 energy expenses. Improved energy performance can increase both your company's bottom line and its market valuation. To help you
 quantify and communicate the value of improved energy performance for your organization, ENERGY STAR developed the Financial
 Value Calculator (FVC).
 The FVC uses the prevailing price/earnings ratio to estimate the market value of increased earnings that can result from increased energy
 efficiency. The tool uses the corporate data you enter to calculate your company's potential financial returns. Both publicly- and privately-
 held companies can use the FVC to assess the potential value of improved energy performance. Importantly, the more complete your
 input data are, the more useful your summary will be in planning your commitment to exemplary performance.
 Follow the simple steps below to get started.

 1. Choose your sector
 Select your business sector from the box on the left and then click the "Input Your Data" button on the right. Financial results generated
 by the calculator are calibrated based on sector-specific assumptions.

 2. Enter your company information
 Enter the following five values: total annual utility bill for all of your buildings, total building floor space, total outstanding common shares,
 earnings per share, and P/E ratio. (Shareholder information is not required for privately held companies or non-profit organizations.)
 Revise the tool’s default values (e.g., analysis term, discount rate) as desired. Included below these data is a short glossary of important
 terms to help you understand how the variables and terms are defined.
 Perhaps you’re unsure what values to input for your company at this point. If so, click on the "Use Representative Sector Data" button and
 industry-specific values will appear in the corporate data worksheet. You can modify these values if you know some of the ones that are
 particular to your company. For example, if you know your corporate building portfolio and shareholder information, then you can overwrite
 these data.
 When you are satisfied with the information you have entered, click "Go to Calculator".

 Click Here to Enter Your Company Information
 3. Choose your energy performance investment goal
 Choose either "Corporate Investment" or "Corporate Building Portfolio" for your energy performance investment goals by clicking on one of
 the two round "radio" buttons.
 If you choose "Corporate Investment," enter two of the three inputs: initial investment, annual energy savings, or target internal rate of
 return. The third input is automatically calculated.
 If you select "Corporate Building Portfolio," choose the percentage of your building portfolio to upgrade. You can enter your own
 percentage or you can select one of the defaults (i.e., 100, 50 and 25 percent) from the dropdown menu. Next, specify a savings-to-
 investment relationship. If you are uncertain about these numbers, choose either of the typical savings-to-investment relationships.
 Clicking one of the three radio buttons activates each of these alternatives.

 4. Review your potential financial returns
 The first table uses an income statement format to calculate net income from potential energy savings. Potential changes in earnings per
 share and market value are calculated based on the increase in net income.
 The second table provides standard financial analysis metrics (e.g., Net Present Value, payback period). The summary text on the left of
 the tables shows potential changes to:
      Net Income: Often referred to as the "bottom line." The company’s total earnings, reflecting revenues adjusted for costs of doing
      business, depreciation, interest, taxes, and other expenses.
      Earnings Per Share: The increased net income divided by the number of outstanding common shares.
      Market Value: A company's total number of outstanding common shares multiplied by the current price per share (also referred to as
      "market capitalization"). You can improve your market value by increasing your earnings or net income, every dollar of which will be
      valued at the current price/earnings ratio.

 Click Here to Use the Financial Value Calculator

Version 2.0
Summer 2005
 5. Estimate new energy performance scores
 If you have benchmarked part of your portfolio and can estimate an average performance rating, you can estimate the change in this
 average score associated with your proposed percent energy reduction.
 Choose the "Analyze Your Energy Performance Score" button. On this new page, first select the building or portfolio type from the scroll
 down list. Then enter the average portfolio or single building's current energy performance rating. (You can choose to enter the portfolio
 or building name.) And then click "Calculate Results" and your building's estimated new rating will be displayed.
 Alternatively, you can enter your current Energy Performance Score and a target score and the calculator will estimate the percent by
 which you will need to reduce your energy consumption to achieve the desired energy savings. And then click "Calculate Results" and the
 tool will display the estimated percent energy reduction.
 NOTE: These benchmark score estimates are not exact results and do not compensate for climate or weather. In addition, this tool is not
 intended to be a permanent database application or replace other tools that simulate whole building energy consumption.

 6. Incorporate estimated energy reduction into FVC
 Click "Analyze Results Using FVC" to switch back to the calculator with the estimate energy reduction information entered under Annual
 Energy Savings. Enter your investment level in the adjacent cell and the FVC will generate your potential financial returns.

 Additional Features
 The "Calculator" and "Delta Score Estimator" worksheets have "Print Result" buttons.
 Use the "Revise Your Data" button to return to the corporate data work sheet.
 Click on "View Cash Flow" to view a table and graph of how your annual energy savings impact on your company's cash flow over a 10-
 year period.
 Click the "View Management Report" button to create a summary page of the information you entered, your potential financial returns, and
 your projected cash flow based on energy savings. These documents can be used to communicate, both internally and externally, the
 potential financial value of your ENERGY STAR investment decisions.
 Throughout the tool, click on "View Instructions" to return to these instructions.

                                         Click Here to Use the Financial Value Calculator
                                                     Return to Welcome Page
 For More Information
 For more information, please visit the ENERGY STAR web site at:
 For questions or comments about this calculator, please email:

Version 2.0
Summer 2005
                             Calculate the Impact of Improved Energy Performance
                                      On Your Company's Financial Value

  Step 1 of 2: Choose your energy performance investment goal

    Each option below will calculate the potential returns associated with improved energy performance. You can decide whether
    to define particular corporate investment rates or focus on building portfolio investment returns by choosing ONE of the options

                                                       Save This Scenario
  View Instructions                                                Retail

                     Corporate Investment                                                    Corporate Building Portfolio
    Specify TWO of the following THREE inputs:                                Select the percentage of your
      Initial Investment ($):                                                  building portfolio to upgrade:
      Annual Energy Savings ($):
      Target Internal Rate of Return (%):                                     Specify your investment and savings values.
                                                                                            OR, choose a typical investment and savings
                                                                                  Ann. Energy Investment Levels         Initial Investment
                                                                   OR              Savings (%)            ($/Sq. Foot)          ($)
                                                                                                                            $           -
                                                                                       20%            $            0.80     $           -
                                                                                       30%            $            1.60     $           -
         View Cash Flows                                   ##### Entries
                                                            Reset                                            Choose Different Sector

  Step 2 of 2: Review your potential financial returns
                                                                                 Income Statement Impacts (10-year average)
                                                                            Energy Cost Savings                             $                -

                                                                               Depreciation, if any                         $                -
                                                                               Interest Payments                                             -
                                                                            Total Expenses                                  $                -
                                                                            Income Before Taxes                             $                -
                                                                            Income Taxes/(Tax Benefits)                     $                -
                                                                            Increased Net Income                            $                -

                                                                                                Financial Summary
                                        Analyze Your Energy                 Initial Investment                              $                -
   View Management Report
                                         Performance Score                  Annual Utility Savings                          $                -
                                                                            Increased Earnings per Share (EPS)                        Need Info Retail
                                                                            Percent Increase in EPS                                   Need Info
                            Revise Your                 View
    Print Results                                                           Internal Rate of Return                                   Need Info
                               Data                 Instructions
                                                                            Payback Period (in years)                                        0.0
                                                                            Net Present Value                               $              -
      Questions? Comments? Email us at:


Version 2.0
Summer 2005
                          Calculate the Impact of Improved Energy Performance
                                   On Your Company's Financial Value

   View Directions                                                                                                           View Definitions
   The information you enter below will be used to calculate the potential financial value for your company.

   Company Name                                                                      Sector                                     Retail

                   Corporate Building Portfolio Information                                        Default Calculator Information
   Total Annual Utility Bill for Buildings *                                         Analysis Term (years) *                                 10
   Commercial Building Floor Space (Sq. Ft.) *                                       Discount Rate *                                       11%
   Energy Cost per Square Foot                                                       Depreciation Method                          Straight Line
                                                                                     Depreciation Period, if any (years)                     10
                         Shareholder Information                                     Financing Period (years)
   Total Outstanding Common Shares *                                                 Cost of Capital (if financed externally)
   Earnings per Share *                                                              Tax Rate                                              41%
   P/E Ratio *
   Required items are shown in red with an asterisk. Shareholder information is not required for privately-held companies or
   non-profit organizations.

    Please enter your notes here.

                                                                                                                       Use Representative
               Clear Data                    Go To Calculator                  Choose Different Sector
                                                                                                                          Sector Data

   Below is a summary of the variables used in the Financial Value Calculator, and their definitions.
   Variable                              Definition
   Total Annual Utility Bill             Total annual corporate electric and gas expenditures to operate buildings.
   Commercial Building Floor Space       Building gross square footage.
   Tot. Outstanding Common Shares        Total common shares issued by a publicly-traded corporation.
   Earnings per Share                    The net income to common shareholders divided by the average number of common shares
                                         outstanding. In the tool, you choose a value that represents the performance of your company over
                                         a multi-year period. Or, simply use your previous year's earnings per share to get started.
   P/E Ratio                             The ratio of current share price to its earnings per share, after taxes, interest, and depreciation. In
                                         the tool, you choose a value that represents the performance of your company over a multi-year
                                         period. Or, simply use a representative P/E ratio to get started.
   Analysis Term                         The analysis period, in years, used to calculate the investment's payback period, internal rate of
                                         return, and net present value. The calculator's default value is 10 years, which assumes your
                                         investment has a long benefit stream.
   Discount Rate                         Percentage rate that captures the user's "opportunity costs" or alternative returns to investment. It is
                                         used to calculate the current value of a stream of future payments -- i.e., energy savings. The
                                         calculator's default value is 11%.
   Depreciation Method                   An accounting method for deducting a one-time cost over a set analysis period. This calculator only
                                         allows for straight-line depreciation.
   Depreciation Period                   Investments have particular depreciation periods; the calculator's default value is a 10-year
                                         depreciation period.
   Financing Period                      The analysis period, in years, used to calculate the costs associated with an externally financed
                                         investment. The calculator assumes that the investment is financed internally -- i.e., financing
                                         period is 0.
   Cost of Capital                       An average percentage rate that a company would pay to raise money through loans or bonds. If no
                                         value is entered, the calculator assumes the investment is financed internally -- i.e., cost of capital is
   Tax Rate                              Taxes are calculated at the state and local level. The calculator's default value of 41% is a 34%
                                         corporate rate for federal taxes and a 7% rate for state taxes.

Version 2.0
Summer 2005
                             Financial Value Calculator
                                Management Report

Financial Value Analysis

Company namecan improve financial performance by investing in energy performance. As shown in the
table below, an initial investment of $0 to upgrade 100% of its building portfolio will result in an estimated
$0 in average annual utility savings over the next 10 years.

• Saving $1 in energy costs can improve profits as much as increasing sales by $80.
• For the average supermarket chain, a 10% reduction in energy costs ….
  Boosts profit margins by almost 6%
  Increases earnings per share by nearly 7%
  Is equivalent to a $42 increase in sales per square foot.

                                                       Company name
  Total Utility Bill                                       $                                                                  -
  Commercial Building Floor Space (Sq. Ft.)                $                                                                  -
  Total Outstanding Common Shares                          $                                                                  -
  Earning Per Share                                        $                                                                  -
  P/E Ratio                                                $                                                                  -
  Initial Investment                                       $                                                          -
  Percentage of Building Portfolio Upgraded                                                                         100%
  Annual Utility Savings                                   $                                                          -
  Net Income                                               $                                                          -
  Increased Earning Per Share                                                                                           Retail
                                                                                                                 Need Info
  Increased Market Value                                   $                                                          -
  Internal Rate of Return                                                                                        Need Info
  Payback Period (in years)                                                                                               -
  Net Present Value                                        $                                                                  -

Version 2.0
Summer 2005
                              Financial Value Calculator
                                 Management Report

Cash Flow Projection

The table below shows the estimated impact of Company name's investment in energy performance on its cash flow for
the next 10 years. Deducting expenses (depreciation and interest payments) and taxes (assumes a tax rate of 41%)
from the annual savings yields a net income of $0. The annual savings over the 10-year period will be $0.

                                       Expenses Excluding                                            Annual Cash       Cumulative
    Year          Annual Savings             Taxes              Taxes           Net Income              Flows           Savings

            0 $               -    $                   -    $           -   $                -   $             -   $            -
            1 $               -    $                   -    $           -   $                -   $             -   $            -
            2 $               -    $                   -    $           -   $                -   $             -   $            -
            3 $               -    $                   -    $           -   $                -   $             -   $            -
            4 $               -    $                   -    $           -   $                -   $             -   $            -
            5 $               -    $                   -    $           -   $                -   $             -   $            -
            6 $               -    $                   -    $           -   $                -   $             -   $            -
            7 $               -    $                   -    $           -   $                -   $             -   $            -
            8 $               -    $                   -    $           -   $                -   $             -   $            -

     TOTAL $                  -    $                   -    $           -   $                -   $             -   $            -

           Print Report                          Return To Calculator                        Delete Corporate Logo

Version 2.0
Summer 2005
                                                     Calculate the Impact of Improved Energy Performance
                                                              On Your Company's Financial Value

      Cash Flow Projection: Option 2

                                                                                                                                                     How Do Your Cumulative Savings
                                                                                                                                                          Change Over Time?
                                        Expenses                                             Annual Cash       Cumulative
         Year        Annual Savings   Excluding Taxes       Taxes           Net Income          Flows           Savings
               $ 0              -     $          -      $           -   $           -    $             -   $            -               $1
               $ 1              -     $          -      $           -   $           -    $             -   $            -               $1

                                                                                                                            Cash Flow
               $ 2              -     $          -      $           -   $           -    $             -   $            -               $1
               $ 3              -     $          -      $           -   $           -    $             -   $            -               $1
               $ 4              -     $          -      $           -   $           -    $             -   $            -               $0
               $ 5              -     $          -      $           -   $           -    $             -   $            -               $0
               $ 6              -     $          -      $           -   $           -    $             -   $            -               $0
               $ 7              -     $          -      $           -   $           -    $             -   $            -
               $ 8              -     $          -      $           -   $           -    $             -   $            -                    0   1      2    3     4    5     6       7   8   9   10
               $ 9              -     $          -      $           -   $           -    $             -   $            -                                              Year
               $10              -     $          -      $           -   $           -    $             -   $            -
         TOTAL $                -     $          -      $           -   $           -    $             -   $            -

          Return To Calculator

      Questions? Comments? Email us at:


Version 2.0
Summer 2005
Version 2.0
Summer 2005
                                           Energy Performance Rating
                                             Delta Score Estimator

What is the Delta Score Estimator ?
The Delta Score Estimator estimates the relationship between percent energy savings and change in the energy performance rating.
 It assumes a typical energy performance profile and typical building characteristics, and does not account for climate or weather. It
can assist you in quickly setting target savings levels or energy performance ratings for either single buildings or your entire portfolio.
  This will allow you to use the Financial Value Calculator to estimate the financial benefits associated with achieving these goals
across your portfolio.

To use the Delta Score Estimator, enter your information into the following fields:
    1. Building or portfolio name (optional),
    2. Building or portfolio type (e.g., Office, K-12, Hospital (acute or children's), Supermarket, and five Hotel types:
       economy/budget, midscale without food & beverage (F&B), midscale with F&B, Upscale, and Upper Upscale),
    3. Current energy performance rating score,
    4. Proposed percent energy reduction, or
    5. Desired energy performance rating score.
If you proposed a percent energy reduction under Step 1 of the FVC, that amount will automatically appear as the proposed energy
reduction on the delta score estimator. Based on the information you enter, the tool will calculate either the score your portfolio can
achieve with the proposed energy reduction or the energy reduction required to achieve a proposed score.

Consider the following as you use this tool within the FVC:

q     If you have not benchmarked any buildings yet, the average score for most portfolios is 50.

q     If you have benchmarked buildings, you can begin to determine an average score for your portfolio by averaging
       calculated scores. These can be weighted by building square footage for a better result.

q     If you have worked in the past with service provider or property managers, you may have some ideas regarding percent
       savings achievable in your buildings.

Keep in mind that all of your buildings will perform differently and offer different opportunities for savings, but plan for an aggressive,
portfolio-wide success that can be messaged out to shareholders and other stakeholders. Use Portfolio Manager to continue to
refine your understanding of your aggregate success over time.

             Print Instructions                                                     Return To Delta

Version 2.0
Summer 2005
                            Energy Performance Rating
                              Delta Score Estimator
  View Instructions
  Step 1
              ENTER Building or Portfolio Name (Optional):

              Select Building or Portfolio Type:                           Select One
              ENTER current energy performance rating:

  Step 2
              Select one of the following options:
                      Percent Energy Reduction:
                       (INPUT a number from 1 to 50 and press "ENTER")
              OR                                                                                  %
                      Desired energy performance rating:
                       (INPUT a number from 1 to 100 and press "ENTER")

                         Calculate Results                                Clear


              Please enter all required inputs and
              then press 'Calculate' button.

              View Instructions                      Print Results            Reset All Entries

                                             Analyze Results Using FVC

Version 2.0
Summer 2005

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