Simplification

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RiskFreeRate 4% Practical Exercise you need to do
MarketReturns 10%
Beta 1.25 1. Do good practice of Name Manager. Go
Formula - Name Manager - Create from
CostofDebt 14% Selection
TaxRate 30%
EquityValue 125000
DebtValue 125000

Cost of Capital 10.65%

Cost of Capital 10.65%

Cost of Capital 10.65% Use name Manager and solve this

cost of equity 11.50%

cost of debt net 9.80%
equity weight 50.00%
debt weight 50.00%
xercise you need to do
practice of Name Manager. Go to
ame Manager - Create from
 Practical Exercise you need to do
Risk Free Rate 4%
Market Returns 10% 1. Do good practice of Name Manager. Form
ERP 6% Use name Manager and solve this 2. Create this from scratch in your own spre
Beta 1.25
3. Complete below excercise (use instructio
Cost of Equity 11.50% Use name Manager and solve this - Complete the forecast using Names
- Highlight cells K23:L25 and create name fo
- Complete "Next Year Sales"(L27) using Nam
Cost of Debt 14% - Complete "Cost of Sales" (L28) using name
Tax Rate 30% - Reduce Cost of sales from Next year sales
Post Tax Cost of Debt 9.8% Use name Manager and solve this

Equity Value 125000

Debt Value 125000
Equity Funding 50.00% Use name Manager and solve this
Debt Funding 50.00% Use name Manager and solve this

Cost of Capital 10.65%

Cost of Capital 10.65%

Cost of Capital 10.65% Use name Manager and solve this

Cost of Capital 10.65% Use name Manager and solve this

l Exercise you need to do
od practice of Name Manager. Formula - Name Manager - Create from Selection

this from scratch in your own spreadsheet (repeat what I have done in video)

ete below excercise (use instructions) - NO SOLUTION PROVIDED FOR THIS - DIY
te the forecast using Names
ht cells K23:L25 and create name for cells L23, L24, and L25
te "Next Year Sales"(L27) using Names
te "Cost of Sales" (L28) using names
Cost of sales from Next year sales to get "Gross Profit" (L29)

Exercise
Current Sales 14,500.0
Sales Growth 10%
Gross Margin 60%

Next Year Sales 15950

Cost of Sales 6380
Gross Profit 9570
D/E Ratio 70%
Coupon Rate 13.75%

D/E Ratio Risk Rating Coupon Rate

0% Baa2 9.50%
30% Baa3 9.75%
50% Ba1 12.25%
60% Ba2 13.75%

D/E Ratio 25%

Coupon Rate 9.50% Use VLOOKUP to solve this - Approximate Match (1)

D/E Ratio Risk Rating Coupon Rate

0% Baa2 9.50%
30% Baa3 9.75%
50% Ba1 12.25%
60% Ba2 13.75%
Current Sales 14,500.0 Practical Exercise you need to do
Sales Growth 10.00%
1. Use goal seek function - Our goal here is
Gross Margin 75.24% at which gross profit will be 11,000
2. First select cell C12, the go to Data Menu
Next Year Sales 15,950.0 Seek
Cost of Sales -3,950.0
3. Ensure "Set cell" is set to C12 - this is the
Gross Profit 12,000.0 goal

4. Input 11000 in "To Value" - this is our go

5. Ensure "By Changing Value" is set to C7 -

change to achieve goal of 11000 gross profi
Exercise you need to do
l seek function - Our goal here is identify the Sales growth
ross profit will be 11,000
ect cell C12, the go to Data Menu - What if Analysis - Goal

"Set cell" is set to C12 - this is the cell where we set of our

1000 in "To Value" - this is our goal we want to achieve.

"By Changing Value" is set to C7 - this is what we want to

achieve goal of 11000 gross profit.
Current Sales 14,500.0 Practical Exercise you need to do
Sales Growth 10.00%
1. Ensure that data is cell C16 should be LINK
Gross Margin 60.00% and not pasted specially as values.
2. Select your data table B16:C25
Next Year Sales 15,950.0
Cost of Sales -6,380.0 3. Go to Data>What If Analysis>Data Table
Gross Profit 9,570.0 4. In "Column Input Cell" Select your input w
column. In this case, it is Sales growth, so we
5. Practice this multiple times.
Sales Growth Gross Profit
9,570.0
8.00% 9,396.0
10.00% 9,570.0
12.00% 9,744.0
14.00% 9,918.0
16.00% 10,092.0
18.00% 10,266.0
20.00% 10,440.0
22.00% 10,614.0
24.00% 10,788.0
Exercise you need to do
that data is cell C16 should be LINKED with your calculation
asted specially as values.
our data table B16:C25

ata>What If Analysis>Data Table

mn Input Cell" Select your input which is mentioned in
n this case, it is Sales growth, so we will put $C$4. Press OK
this multiple times.
Current Sales 14,500.0
Sales Growth 10.00%
Gross Margin 60.00%

Next Year Sales 15,950.0

Cost of Sales -6,380.0
Gross Profit 9,570.0

Gross Profit
9,570.0 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%
8.00% 6,264.0 7,830.0 9,396.0 10,962.0 12,528.0 14,094.0
10.00% 6,380.0 7,975.0 9,570.0 11,165.0 12,760.0 14,355.0
12.00% 6,496.0 8,120.0 9,744.0 11,368.0 12,992.0 14,616.0
Sales growth 14.00% 6,612.0 8,265.0 9,918.0 11,571.0 13,224.0 14,877.0
16.00% 6,728.0 8,410.0 10,092.0 11,774.0 13,456.0 15,138.0
18.00% 6,844.0 8,555.0 10,266.0 11,977.0 13,688.0 15,399.0
20.00% 6,960.0 8,700.0 10,440.0 12,180.0 13,920.0 15,660.0
22.00% 7,076.0 8,845.0 10,614.0 12,383.0 14,152.0 15,921.0
24.00% 7,192.0 8,990.0 10,788.0 12,586.0 14,384.0 16,182.0
Practical Exercise you need to do

1. Watch video and do it with me simultaneously. Its VERY IMP that

you have good hold on operating data tables with two inputs. It's
popularily known as Scenario Analysis.

2. Columns are UP TO DOWN Rows are LEFT TO RIGHT

3. In preperation of data table while asking for row input put the
data of row (that is written in blue clour from left to right) ,here which
is gross profit and for column input put the data of column(that is
written in blue colour from up to down) , here which is sales growth .
eously. Its VERY IMP that
es with two inputs. It's

EFT TO RIGHT

g for row input put the

om left to right) ,here which
e data of column(that is
here which is sales growth .
Scenario Summary
Current Values: base case worst case best case
Changing Cells:
Result Cells:
Notes: Current Values column represents values of changing cells at
time Scenario Summary Report was created. Changing cells for each
scenario are highlighted in gray.
Current Sales 14,500.0
Sales Growth 10.00%
Gross Margin 60.00%

Next Year Sales 15,950.0

Cost of Sales -6,380.0
Gross Profit 9,570.0
Practical Exercise you need to do
1. Go to Data> What if Analysis > Scenario Manager
2. Click on 'Add Scenario'

3. Name your Scenario (Worst Case/Base Case/Best Case); then mention Input
cells (C6:C8) in Changing Cells. Press OK

4. Now "Scenario Values" window will open. Input Current Sales/Sales Growth
Percent/Gross Margin as per cell selected. Press Ok. The Scenario is now
added in Scenario Manager.

5. Add remaining scenarios.

6. Once all scenarios are added, Open Scenario Manager - Press 'Summary' to
get result of all scenarios. Keep report type as "Scenario Summary"
Current Sales 14,500.0 Practical Exercise you
Sales Growth 10.00%
1. Use Data Validation on
Gross Margin 60.00% data validation - Alt+A+V
2. Your Sales Growth rate
Next Year Sales 15,950.0 Settings Tab
Cost of Sales -6,380.0
3. On 'Input Message' tab
Gross Profit 9,570.0 generally ranges between
4. On the 'Error Alert' tab
you want. For Eg - "Reche
10%"
5. Once complete - Test i

6. Practice 'Circle Invalid

Practical Exercise you need to do
1. Use Data Validation on cell C7 i.e. Sales growth percent input cell. To open the
data validation - Alt+A+V+V
2. Your Sales Growth rate should be between 0 to 10% on Data Validation -
Settings Tab
3. On 'Input Message' tab, set title as "Please Note:" and then type "Sales growth
generally ranges between 0 to 10%" in 'Input Message' box.
4. On the 'Error Alert' tab, set the style to 'Warning' and type the error message
you want. For Eg - "Recheck Sales growth percent, historically it lies between 0%-
10%"
5. Once complete - Test it to ensure data validation is working properly.

6. Practice 'Circle Invalid Data' function once - We will use it in future sessions.
 Practical Exercise
Current Sales 14,500.0
Watch video again
Sales Growth 10.00% important excercis
Gross Margin 60.00% model

Next Year Sales 15,950.0

Cost of Sales -6,380.0
Gross Profit 9,570.0
Practical Exercise you need to do
Watch video again and do it with me simultaneously. Its very
important excercise to ensure that no one can mess up with your
model