Exam 18: Financial Modeling and Pro Forma Analysis

A firm has $80 million in equity and $40 million of debt, it pays dividends of 20% of net income, and has a net income of $10 million. What is the firm's sustainable growth rate?

What are a firm's options when it generates more cash than planned?

Compute the value of a firm with free cash flows of $4,000, $4,500, and $5,000 over the next three years, a terminal firm value of $60,000 after three years, and the unlevered cost of capital is 10%. Assume that the interest rate tax shield is zero.

LG Inc. has done a long-term forecast of its balance sheet. The projected total assets for the next year are $100 million. The current liabilities are projected to be $40 million and other long term liabilities are $30 million. How much net new financing is needed in the following year?

Use the tables for the question(s) below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -The amount of net working capital for Ideko in 2011 is closest to ________.

One of the shortcomings of the percent of sales method is that it does not account for the fact that capacity changes are lumpy and not incremental.

How do we compute net new financing?

Calgary Doughnuts had sales of $300 million in 2007. Its cost of sales were $200 million. If sales are expected to grow at 15% in 2008, compute the forecasted costs using the percent of sales method.

A firm has $20 million in equity and $20 million of debt, it pays dividends of 20% of net income, and has a net income of $5 million. What is the firm's sustainable growth rate?

LG Inc. has done a long-term forecast of its balance sheet. The projected total assets for the next year are $300 million. The current liabilities are projected to be $170 million and other long term liabilities are $70 million. How net new financing is needed in the following year?

What is the free cash flow to equity holders for a firm with free cash flow of $11,000, after-tax interest expense of $2,000, and an increase in debt of $2,000?

While the assets and accounts payable of a firm may reasonably be expected to grow with sales, ________ will not naturally grow with sales.

The market size for Loppins is 60 million units. If SPI Inc. has a market share of 20% and the average sales price is $3 per Loppin, what is the dollar amount of sales of SPI?

Use the tables for the question(s) below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -Assuming that Ideko has an EBITDA multiple of 8.5, then the continuation unlevered price-earnings ratio of Ideko in 2015 is closest to ________.

Use the tables for the question(s) below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -The amount of the increase in net working capital for Ideko in 2012 is closest to ________.

LG Inc. has done a long-term forecast of its balance sheet. The projected total assets for the next year are $200 million. The current liabilities are projected to be $100 million and other long term liabilities are $70 million. How much net new financing is needed in the following year?

Given the following data for a given period, compute the free cash flow to the firm: Net Income = $10,000 After-tax Interest Expense = $1,000 Depreciation = $1,000 Increase in NWC = $1,000 Capital Expenditures = $2,000

Calgary Doughnuts had sales of $100 million in 2007. Its cost of sales were $70 million. If sales are expected to grow at 20% in 2008, compute the forecasted costs using the percent of sales method.

Why is EBITDA multiple used for valuation rather than sales or earnings?

Pledrea Inc. has EBITDA at the forecast horizon of $10,000. Its EBITDA multiple is 12. What is the terminal value of the firm at the forecast horizon?