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The Discounted Free Cash Flow Model For A Complete Business

The document presents a discounted free cash flow valuation model for a company over multiple years. It shows key inputs like revenue growth, gross profit margin, expenses, depreciation, capital expenditures, tax rates, and discount rates. The outputs include gross profit, net operating profit, annual free cash flow, terminal value, and present value of company operations. By changing the forecasting variables in red, it observes the effect on the valuation conclusion. The business value is most sensitive to changes in the revenue growth rate and least sensitive to changes in the depreciation & amortization percentage of revenue.

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arijitroy
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© Attribution Non-Commercial (BY-NC)
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31 views

The Discounted Free Cash Flow Model For A Complete Business

The document presents a discounted free cash flow valuation model for a company over multiple years. It shows key inputs like revenue growth, gross profit margin, expenses, depreciation, capital expenditures, tax rates, and discount rates. The outputs include gross profit, net operating profit, annual free cash flow, terminal value, and present value of company operations. By changing the forecasting variables in red, it observes the effect on the valuation conclusion. The business value is most sensitive to changes in the revenue growth rate and least sensitive to changes in the depreciation & amortization percentage of revenue.

Uploaded by

arijitroy
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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The Discounted Free C

Total revenue
Cost of Goods Sold
Gross profit
Selling, general and administrative expenses
Earnings before interest, taxes, depr. & amort. (EBITDA)
Depreciation and amortization
Earnings before Interest and taxes (EBIT)
Available tax-loss carryforwards
Net taxable earnings
Income Taxes
Net Operating Profit After-Tax (NOPAT)
Add back depreciation and amortization
Subtract Capital Expenditures
Subtract New Net Working Capital
Free Cash Flow
Terminal value
Present Value of Free Cash Flows @ 40%
Total Present Value of Company Operations
Plus Current Assets
Total Value of Company's Assets

122511
116389.67
238900.67

The Discounted Free Cash Flow Model for a Complete Business


Pie In the HDFCCompany

2008

2009

2010

2011

2012

2013

2014

2015

19802.97

30694.6 49111.37 81033.75 137757.4 241075.4 445989.5 847380.1

2,190

27380
43807
71310
119849
204914
374631
703325
3314.604 5304.366 9723.753 17908.38 36161.42 71358.52 144055.1

17,613

1580.23
2456
3929
6483
11021
19286
35679
67790
16,033 858.6035 1375.366 3240.753 6887.381 16875.42 35679.52 76265.09
359.91
558
982
1621
2755
4822
8920
16948
15,673 300.6035 393.3656 1619.753 4132.381 12053.42 26759.52 59317.09
0
0
0
0
0
0
0
0
0 300.6035 393.3656 1619.753 4132.381 12053.42 26759.52 59317.09

0 90.18105 118.0097 485.926 1239.714 3616.025 8027.856 17795.13


15,673 210.4225 275.3559 1133.827 2892.666 8437.391 18731.66 41521.96
558
982
1621
2755
4822
0
0
0
0
0
93575.67 1306.996 2394.179 4469.134 8508.544 16530.89
109,608
2,075
3,652
7,224
14,156
29,790
359.91

8920
0
34835.4
62,487

16948
0
72250.3
130,720

16091

30326

4874344
901

1427

2544

4492

8515

2016
1652391
1354961
297430.2
132191
165239.2
33048
132191.2
0
132191.2
39657.35
92533.82
33048
0
152952.1
278,534

58215

Value Drivers: The Discounted Free Cash Flow Mo

the forecasting variables shown in red below and observe the effect on the model's outputs in the section below. To what variabl
Pie In the HDFC Company
Value Drivers (Forecasting Variables):
Revenue growth factor
Expected gross profit margin
S, G, & A expense % of revenue
Depr. & Amort. % of revenue
Capital expenditure growth factor
Net working capital to sales ratio
Income tax rate
Assumed long-term sustainable growth rate
Discount rate

2009

2010

55%
11%
8%
2%
100%
12%

60%
11%
8%
2%
100%
13%

30%
5%
11%

2009
2010
2011
2012
Gross profit margin 0.107987 0.108007 0.119996 0.129999
Net operating profit margin 0.006855 0.005607 0.013992 0.020998
Free cash flow ($ mil)
2,075
3,652
7,224
14,156
Terminal value ($ mil) 4874344

Valuation Model Outputs:

PV of Company Operations ($ mil)

122511

nted Free Cash Flow Model for a Business

ection below. To what variable is the business value conclusion most sensitive? To what variable is it least sensitive?
In the HDFC Company

2011

2012

2013

2014

2015

2016

65%
12%
8%
2%
100%
14%

70%
13%
8%
2%
100%
15%

75%
15%
8%
2%
100%
16%

85%
16%
8%
2%
100%
17%

90%
17%
8%
2%
100%
18%

95%
18%
8%
2%
100%
19%

2014
2015
0.16 0.170001
0.042
0.049
62,487 130,720

2016
0.18
0.056
278,534

2013
0.15
0.034999
29,790

ble is it least sensitive?

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