THEORIES

1 A good competency of a financial modeler is least to be ___________

2
When the discounted net cash flows are summed to represent the value
made available to both equity and debt claim in the business or the asset is
called __________.
Terminal Value
Equity Value
Enterprise Value
Book Value

3 A lot of macroeconomic indicators are used in financial modelling the least

4
These are portfolio managers that based their valuation on the characteristics
of an entity related to its financial strength, profitability or risk appetite is
__________
Fundamental Analyst
Activist Investor
Chartists
Information Trader

5 The portfolio managers that rely on trends and metrics like KPIs, price
movements, trading volume and short sales are called _____
Fundamental Analyst
Activist Investor
Charterists
Information Trader

6 The portfolio managers are more interest in taking over the companies in
distress or under a poor management are called _______
Fundamental Analyst
Activist Investor
Chartists
Information Trader
7
The portfolio managers based their value on the processed data applying
logical concepts that were made available in the market or through research
is called ________
Fundamental Analyst
Activist Investor
Chartists
Information Trader

8 Collectively, the financial model must be able to filter the information that
would be necessary for the valuation which are
Timeliness and Reliability
Prudence and Timeliness
Reliability and Relevance
Prudence and Relevance

9
Investment that are already in the going concern state, as most businesses
are in the optimistic perspective that will grow in the future is known as
________.
Green Field Investment
Brown Field Investment
Grind-Field Investment
Borrow-Field Investment

10 The activity that uses forecasts to come up with reasonable estimate of the
entity’s asset or equity worth is called __________
Financial Accounting
Financial Planning
Financial Management
Valuation

11 The value of the company can be compared using the perceived value and
compared to its expected returns is _________.
Price Earnings Ratio
Book to Market Ratio
Dividend Yield Ratio
EBITDA Multiple

12 The representative value of the company that accounts for the cash flows,
assuming that the growth is already in stable condition is __________.
Terminal Value
Equity Value
Enterprise Value
Book Value

13 The value imputed on the firm in order to gain control over it is called _____.
Equity Control Premium
Equity Value
Earning Accretion
Price Earnings Ratio
 PROBLEMS
1
Yoshino Corp. is planning to expand and new projects is expecting to earn an average of Php375,000. If
the project requires for Php5,000,000 investment at 10% cost of capital. Yoshino Corp recomputed the
earnings and resulted to an average of Php750,000 per year. The economic value added in this scenario
is _______
Php 125,000 Earnings ₱ 375,000
(Php 125,000) Less: CC ₱ 500,000
Php 250,000 EVA -₱ 125,000
(Php 250,000)

2 Assuming the required return is 10%, the enterprise value of the company assuming the following net
cash flows: Year 1 – Php250; Year 2 - Php300; Year 3 – Php350 is _________
Php300.12 Year NCF Disc factor Disc NCF EVA
Php900.85 1 250 0.9091 ₱ 227.27
Php738.17 2 300 0.8264 ₱ 247.93
Php1,000.00 3 350 0.7513 ₱ 262.96 ₱ 738.17

3
The management accountant of E. Nakiri Inc. has calculated their book value per share at Php6.25. If E.
Nakiri shares will be sold using the average book to market ratio for the industry similar to the
company of 0.68, the prices per share would be at ___________
9.19 NBV per share ₱ 6.25
6.25 BMV ratio 0.68
4.25 MVPS ₱ 9.19
10

4 Satoshi Inc. provided the following information: Earnings Per Share is Php25; P/E Multiple is 2.0. The
Market Value Per share of Satoshi Inc. is _________.
Php 50.00 EPS ₱ 25.00
Php 50.75 P/E Multiple 2.00
Php 48.00 MVPS 50.00
Php 55.00

5
Aldini Inc. has reported net cash flows amouting Php625,000. The terminal value is assumed to end at 8
years. Assuming the historical information has 5% growth rate, the terminal value is ___________
Php625,000 NCF ₱ 625.00
Php31,000 Growth rate 5%
Php12,500 Terminal Value ₱ 12,500
Php15,000

7 Tadokoro Corp., a listed company, sells its share in the stock market at Php13.5 per share with EPS of
Php2.5. The P/E Ratio is ________
5.4 MVPS ₱ 13.50
5 EPS 2.50
 2.5 P/E Ratio ₱ 5.40
3.5

6
Marui Corp. has 1,000,000 outstanding shares and reported its Earnings Per Share at Php14.25. Marui
Corp. targets to increase its net income by 10% for the succeeding years hence they spent
Php20,000,000. The estimated depreciation is Php500,000 per year starting year 1. The Marui’s cost of
capital is 8%. The net present value of cash flows for 3 years is ________
Php 23,217,132.17 Year 1 2 3
(Php 23,217,132.17) Earnings ₱ 14,250,000.00 ₱ 15,675,000.00 ₱ 17,242,500.00
Php 21,802,364.35 CAPEX -₱ 20,000,000.00 ₱ - ₱ -
(Php 21,802,364.35) Dep. ₱ 500,000.00 ₱ 550,000.00 ₱ 605,000.00
NCF -₱ 5,250,000.00 ₱ 16,225,000.00 ₱ 17,847,500.00
Disc factor 0.9259 0.8573 0.7938
NCF-Firm -₱ 4,861,111.11 ₱ 13,910,322.36 ₱ 14,167,920.92
NPV NCF ₱ 23,217,132.17
 SHOKUGEKI CORP.
Soma Yukihira is the management accountant of Shokugeki Corp. assess the value of their company using their asse
value as the basis. Being in the company for more than 5 years he already gained sufficient understanding of the bu
thus, forecasting the company’s financial performance would be easy for him. Despite of this his has limited exposu
valuation and he is aware that selecting right valuation model is critical in the process before he could start modelli
based on forecast, he made in order to arrive at a conclusion and recommendation.

As of the end of the previous year, the statement of financial position reported the following balances: Asset –
Php950,000; Liability – Php500,000; Equity – Php450,000 with 100,000 outstanding shares. The revenue is projecte
the following years as follows:
Year Revenue in PhP
1 725,000
2 775,750
3 830,050
4 888,150
5 950,320

The projected operating expenses is 40% of the revenue inclusive of the Php10,000 depreciation per year. The appl
tax rate is 30%. It is further assumed that 80% of the revenue is collected on the same year and the rest on the follo
year. The 75% of the cash operating expenditures were paid on the year and the remaining were settled the follow
year. The required return for this business is 10%.

Solution:
Year 1 2 3 4
Revenue 7% ₱ 725,000 ₱ 775,750 ₱ 830,050 ₱ 888,150
OPEX 40% ₱ 290,000 ₱ 310,300 ₱ 332,020 ₱ 355,260
EBIT ₱ 435,000 ₱ 465,450 ₱ 498,030 ₱ 532,890
Taxes 30% ₱ 130,500 ₱ 139,635 ₱ 149,409 ₱ 159,867
Net Income ₱ 304,500 ₱ 325,815 ₱ 348,621 ₱ 373,023
Depreciation ₱ 10,000 ₱ 10,000 ₱ 10,000 ₱ 10,000
Uncollected revenue 20% -₱ 145,000 -₱ 155,150 -₱ 166,010 -₱ 177,630
Revenue collected fr past year ₱ 145,000 ₱ 155,150 ₱ 166,010
Unpaid expenses 25% ₱ 75,000 ₱ 80,075 ₱ 85,505 ₱ 91,315
Paid expenses fr past year -₱ 75,000 -₱ 80,075 -₱ 85,505
Terminal Value 7%
Free Cash Flows ₱ 244,500 ₱ 330,740 ₱ 353,191 ₱ 377,213
Discount factor 10% 0.9091 0.8264 0.7513 0.6830
NCF-Firm ₱ 222,273 ₱ 273,339 ₱ 265,358 ₱ 257,642
Enterprise Value ₱ 4,842,791
Liability ₱ 500,000 MVPS ₱ 43.43
Equity Value ₱ 4,342,791
1 Refer to the case of Shokugeki Corp.. Soma should be mindful that the value of the asset cannot be generate
based on _____
Current Operations
Future Prospects
Analytical Skills
Embedded Risks

2 Refer to the case of Shokugeki Corp.. the steps in valuation were noted by Soma except for ______
Understanding the business
Selecting the Right Valuation Model
Modelling based on Forecast
Issue advertisement to gather information

3 Refer to the case of Shokugeki Corp.. Shokugeki Corp.’s revenue growth rate is ____
5%
7%
9%
10%

4 Refer to the case of Shokugeki Corp., the EBITDA Multiple for Shokugeki Corp. is. ______
7.34 MVPS ₱ 43.43
7.96 EBITDAPS ₱ 4.45
9.75 EBITDA Mul ₱ 9.76
12.96

5 Refer to the case of Shokugeki Corp.. Assuming that the equity value is the market value of Shokugeki Corp,
book to market ratio is ___________.
7.80% NBVPS ₱ 4.5
10.37% MVPS ₱ 43.43
12.70% BMV 10.36%
13.78%

6 Refer to the case of Shokugeki Corp.. If Shokugeki Corp declared dividends of Php2.5 per share, the dividend
ratio is ________.
4.33% DIVPS ₱ 2.50
5.76% MVPS ₱ 43.43
7.05% DYR 5.76%
7.50%

7 Refer to the case of Shokugeki Corp. The equity value per share of Shokugeki Corp is ____
Php 35.44 Equity Value ₱ 4,342,791
Php 32.66 Outstanding shares ₱ 100,000
Php 43.38 EqV per share ₱ 43.43
Php 57.68
8 Refer to the case of Shokugeki Corp.. Considering the earnings per share projected for year 1, the price to ea
multiple of Shokugeki Corp is __________.
14.25 MVPS ₱ 43.43
18.94 EPS ₱ 3.05
11.64 PE Ratio ₱ 14.26
10.73

9 Refer to the case of Shokugeki Corp. The terminal value applicable for this business is ______
Php 8,058,348
Php 5,756,127
Php 4,476,860
Php 4,029,174

10 Refer to the case of Shokugeki Corp. The enterprise value per share of Shokugeki Corp is _____
Php 40.44 Enterprise Value ₱ 4,842,790.83
Php 37.66 Outstanding shares 100,000
Php 48.38 Enterprise Value PS ₱ 48.43
Php 62.68
r company using their asset
nt understanding of the business
this his has limited exposure on
ore he could start modelling

wing balances: Asset –

eciation per year. The applicable

5
₱ 950,320
₱ 380,128
₱ 570,192
₱ 171,058
₱ 399,134
₱ 10,000
-₱ 190,064
₱ 177,630
₱ 97,532
-₱ 91,315
₱ 5,755,962.86
₱ 6,158,880
0.6209
₱ 3,824,180
e asset cannot be generated

xcept for ______

__

_____

value of Shokugeki Corp, the

2.5 per share, the dividend yield

is ____
 for year 1, the price to earnings

s is ______

Corp is _____