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FCFF Template

This document provides an example of calculating free cash flow to the firm (FCFF) for valuing Alibaba's IPO. It includes: 1) Historical and projected financial statements including EBIT, depreciation, capital expenditures, and changes in working capital to calculate FCFF for 2010-2022. 2) Discounting the explicit period (2015-2019) FCFF projections at 9% to get a net present value of $321.9 billion. 3) Calculating a $812.1 billion terminal value in 2019 using a perpetual 3% growth rate, then discounting to net present value. 4) Summing the NPVs to determine an enterprise value of

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Rizqi Harry
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81 views8 pages

FCFF Template

This document provides an example of calculating free cash flow to the firm (FCFF) for valuing Alibaba's IPO. It includes: 1) Historical and projected financial statements including EBIT, depreciation, capital expenditures, and changes in working capital to calculate FCFF for 2010-2022. 2) Discounting the explicit period (2015-2019) FCFF projections at 9% to get a net present value of $321.9 billion. 3) Calculating a $812.1 billion terminal value in 2019 using a perpetual 3% growth rate, then discounting to net present value. 4) Summing the NPVs to determine an enterprise value of

Uploaded by

Rizqi Harry
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Free Cash Flow to Firm Example

Prepared by Dheeraj Vaidya


www.wallstreetmojo.com
Example: FCFF
Alibaba IPO
FCFF Valuations

Free Cash Flow Projections Historicals


(RMB in Million Except Per Share Amount Mar-10 Mar-11 Mar-12

EBIT (873) 1,322 5,015


Free Cash Flow to Firm
EBIT x (1-t) (1,420) 1,099 4,252
Add: Depreciation & amortization 715
Less: Capex (749)
Add: Change in working capital
FCFF

Free cash flow to firm of explicit period (2015E to 2019E)


Mar-10 Mar-11 Mar-12
Cash Flows
NPV of explicit period 321,953

Terminal value @ perpetual growth (2019) Mar-10 Mar-11 Mar-12


Terminal value as of 2019
NPV of terminal value 812,148

DCF Valuation Summary

DCF calculation as of Valuation (RMB) Valuation (US$)


NPV of explicit period 321,953 51,791
NPV of terminal value 812,148 130,646
Enterprise Value 1,134,100 182,437
+ Cash $48,550 7,810
- Debt ($40,310) (6,484)
Equity value 1,142,340 183,851
+ Short term investments, restricted cash, investment s 12,587 2,025
+Investment in equity investees 13,009 2,093
+ Alipay valuation 24,866 4,000
Stock Option Value $3,207 516
Adjusted Equity Value 1,189,595 191,452
Share Price 486.21 78.25

Sensitivity Analysis

191.45 7%
1% 214.44
2% 245.93

growth
3% 293.17
4% 371.91
5% 529.38
6.0% 1,001.78
toricals Forecasts
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17

10,751 26,514 33,072 41,871 53,260

9,202 24,575 29,103 36,009 45,271


805 947 2,691 5,069 8,089
(1,046) (3,010) (9,225) (11,679) (14,855)
4,285 2,260 3,884 4,861 6,292
13,246 24,772 26,453 34,261 44,795

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17


26,453 34,261 44,795

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17


0 0 -

Cost of Capital 9.00%


Infinite growth rate 3.00%
WACC
8% 9% 10% 11%
181.46 156.87 137.87 122.78
202.53 171.69 148.69 130.90
232.04 191.45 162.59 141.05
276.31 219.12 181.13 154.10
350.08 260.61 207.08 171.50
497.62 329.78 246.01 195.86
recasts
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

68,042 86,110 99,367 109,558 115,580

57,155 70,610 79,493 85,455 86,685


11,938 16,831 22,717 29,348 36,493
(18,979) (24,018) (27,716) (30,558) (32,238)
8,167 9,982 7,324 5,630 3,327
58,282 73,405 81,819 89,875 94,267

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22


58,282 73,405 81,819 89,875 94,267

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22


- - - - 1,618,255

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