Oct-14
Important:
Amazon
There should be a check
Numbers from your base year below ( in con
This year
Last year
United States of America
Retail Store
Retail (Internet)
$
85,246.00
###
$
98.00 $ 745.00
$
175.00 $
51.00
$
10,336.00 $9,746.00
$
5,089.00 $5,181.00
No
If you want to capitalize
Yes
If you have operating lea
$
10,252.00
###
$
###
$
###
463.01
$
287.06
31.80%
31.80%
Country of incorporation
Industry (US)
Industry (Global)
Revenues
Operating income or EBIT
Interest expense
Book value of equity
Book value of debt
Do you have R&D expenses to capitalize?
Do you have operating lease commitments?
Cash and cross holdings
Non-operating assets
Minority interests
Number of shares outstanding =
Current stock price =
Effective tax rate =
Marginal tax rate =
The value drivers below:
Compounded annual revenue growth rate over next 5 ye
15.00%
Expected target operating margin
Median (US retail & media)
Target pre-tax operating margin (EBIT as % of sales in y
7.38%
Sales to capital ratio (for computing reinvestment) =
3.68
Market numbers
Riskfree rate
2.20%
Initial cost of capital =
Err:522
Other inputs
Do you have employee options outstanding?
No
Number of options outstanding =
122.80
Average strike price =
$0.85
Average maturity =
3.79
Standard deviation on stock price =
40.00%
Default assumptions.
In stable growth, I will assume that your firm will have a cost of capital similar to that of typical mature compan
Do you want to override this assumption =
Yes
Mature companies genera
If yes, enter the cost of capital after year 10 =
8%
Though some sectors, ev
I will assume that your firm will earn a return on capital equal to its cost of capital after year 10. I am assuming
Do you want to override this assumption =
Yes
Mature companies find it
If yes, enter the return on capital you expect after year
10%
But there are significant e
I will assume that your firm has no chance of failure over the foreseeable future.
Do you want to override this assumption =
No
Many young, growth com
If yes, enter the probability of failure =
20%
Tough to estimate but a k
What do you want to tie your proceeds in failure to?
V
B: Book value of capital, V
Enter the distress proceeds as percentage of book or fai
50%
This can be zero, if the as
I will assume that your effective tax rate will adjust to your marginal tax rate by your terminal year. If you overr
Do you want to override this assumption =
No
I will assume that you have no losses carried forward from prior years ( NOL) coming into the valuation. If you h
Do you want to override this assumption =
No
Check the financial statem
If yes, enter the NOL that you are carrying over into yea
$250.00
An NOL will shield your in
mportant: Before you run this spreadsheet, go into preferences in Excel and check under Calculation options
There should be a check against the iteration box. If there is not, you will get circular reasoning errors.
se year below ( in consistent units)
Time period since last year
0.75
Don't adjust operating income for leases or R&D, if you plan to use the spreadsheet option to do so. (see below
If you want to capitalize R&D, you have to input the numbers into the R&D worksheet.
f you have operating leases, please enter your lease commitments in the lease worksheet below and I will convert to debt
Computed numbers: Here is what your company's numbers look like, relative to industr
If you are not working in US dollars, you should add the inflation differential to the industry average
Company Industry (US data
Revenue growth in the most recent year =
19.78%
8.73%
Pre-tax operating margin in the most recent year
Err:522
5.53%
Sales to capital ratio in most recent year =
16.48 3.6806390246
Return on invested capital in most recent year=
2.70%
13.70%
Standard deviation in stock prices =
40.98%
Cost of capital =
7.74%
f typical mature companies (riskfree rate + 4.5%)
Mature companies generally see their risk levels approach the average
Though some sectors, even in stable growth, may have higher risk.
r year 10. I am assuming that whatever competitive advantages you have today will fade over time.
Mature companies find it difficult to generate returns that exceed the cost of capital
But there are significant exceptions among companies with long-lasting competitive advantages.
Many young, growth companies fail, especially if they have trouble raising cash. Many distressed companies fail, because th
Tough to estimate but a key input.
B: Book value of capital, V= Estimated fair value for the company
This can be zero, if the assets will be worth nothing if the firm fails.
erminal year. If you override this assumption, I will leave the tax rate at your effective tax rate.
nto the valuation. If you have a money losing company, you may want to override tis.
Check the financial statements.
An NOL will shield your income from taxes, even after you start making money.
Calculation options
heet option to do so. (see below)
below and I will convert to debt
look like, relative to industry.
fferential to the industry averages.
Industry (Global data)
9.44%
4.77%
6.75
27.88%
essed companies fail, because they have trouble making debt payments.
Terminal cash flow
Err:522
Terminal cost of capital
8.00%
Terminal value
Err:522
PV(Terminal value)
Err:522
PV (CF over next 10 years
Err:522
Sum of PV
Err:522
Probability of failure =
0.00%
Proceeds if firm fails =
Err:522
Value of operating assets =
Err:522
Debt
Err:522
Minority interests
$
+ Cash
$ 10,252.00
+ Nonoperating assets
$
Value of equity
Err:522
Value of options
$0.00
Value of equity in common
Err:522
Number of shares
463.01
Estimated value /share
Err:522
Price
$ 287.06
Price as % of value
Err:522
Implied variables
Sales to capital ratio
Invested capital
ROIC
Compare this return
a. the industry ave
b. the return on cap
If it is too high (low)
Terminal year
10
2.20%
2.20% Check these revenues against
a. Overall market size
$ 243,405.14 $ 248,760.06
b. Largest companies in this market
Err:522
Err:522
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Err:522
Err:522 This is is how much your operating
income grew over the ten-year period.
31.80%
31.80%
Err:522
Err:522
$ 1,423.57
Err:522
Err:522 This is how much capital you
invested over the ten year
Err:522
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period.
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3.68
Err:522
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8.00%
After year 10
10.00%
Compare this return on capital in year 10 against
a. the industry average(column E of worksheet)
b. the return on capital after year 10
If it is too high (low), you may want to lower (raise) your sales to capital ratio
Valuing Options or Warrants
Enter the current stock price =
$ 287.06
Enter the strike price on the option =
$ 0.85
Enter the expiration of the option =
3.79
Enter the standard deviation in stock prices =
40.00% (volatility)
Enter the annualized dividend yield on stock =
0.00%
Enter the treasury bond rate =
2.20%
Enter the number of warrants (options) outstan
122.80
Enter the number of shares outstanding =
463.01
Do not input any numbers below this line
VALUING WARRANTS WHEN THERE IS DILUTION
287.06 # Warrants issued=
Stock Price=
0.85 # Shares outstanding=
Strike Price=
Err:522 T.Bond rate=
Adjusted S =
0.85 Variance=
Adjusted K =
3.79 Annualized dividend yield=
Expiration (in years) =
Div. Adj. interest rate=
d1 =
N (d1) =
Err:522
Err:522
d2 =
N (d2) =
Err:522
Err:522
Value per option =
Value of all options outstanding =
Err:522
Err:522
122.8
463
2.20%
0.1600
0.00%
2.20%
VALUATION DIAGNOSTICS
Invested capital at start of valuation
Invested capital at end of valuation
Change in invested capital over 10 years
Change in EBIT*(1–t) (after-tax operating income) over 10 years
Marginal ROIC over 10 years
ROIC at end of valuation
Average WACC over the 10 years (compounded)
Your calculated value as a percent of current price
Inputs
Revenue growth rate (input cell B3)
Last period EBIT as % of revenue (Input cell B14)
Sales to Capital Ratio or reinvestment (Input cell B15)
Return on capital in perpetuity (B30 & B31)
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If calculated value is negative or looks too low
Increase revenue growth rate
Increase the target pretax operating margin
Decrease the sales/capital ratio
Increase relative to your cost of capital
Err:522
If calculated value looks too high
Decrease revenue growth rate
Decrease the target pretax operating margin
Increase the sales/capital ratio
If higher than your cost of capital, lower towards your cost of capital
T
R & D Converter
This spreadsheet converts R&D expenses from operating to capital expenses. It makes the appropriate adjustments to operating income, net
income, the book value of assets and the book value of equity.
Inputs
Over how many years do you want to amortize R&D expenses
3
! If in doubt, use the lookup table below
Enter the current year's R&D expense =
$ 8,501.00 The maximum allowed is ten years
Enter R& D expenses for past years: the number of years that you will need to enter will be determined by the amortization period
Do not input numbers in the first column (Year). It will get automatically updated based on the input above.
Year
1
2
3
0
0
0
0
0
0
0
Output
Year
Current
1
2
3
0
0
0
0
0
0
0
R& D Expenses
6565.00
! Year 1 is the year prior to the current year
4564.00
! Year 2 is the two years prior to the current year
2909.00
$3,821.67 ! A positive number indicates an increase in operating income (add to report
$1,215
Tax Effect of R&D Expensing
riate adjustments to operating income, net
If in doubt, use the lookup table below
he maximum allowed is ten years
mined by the amortization period
increase in operating income (add to reported EBIT)
Operating Lease Converter
The yellow cells are input cells. Please enter them.
Inputs
Operating lease expense in current year =
Operating Lease Commitments (From footnote to financials)
Year
Commitment ! Year 1 is next year, ….
1
$752.00
2
$654.00
3
$604.00
4
$539.00
5
$470.00
6 and beyond $2,116.00
$ 759.00
Output
Pretax Cost of Debt =
Err:522
Number of years embedded in yr 6 estimate =
! If you do not have a cost of debt, use the synthetic rating estimator
4
! I use the average lease expense over the first five years
to estimate the number of years of expenses in yr 6
Converting Operating Leases into debt
Year
Commitment Present Value
1 $ 752.00
Err:522
2 $ 654.00
Err:522
3 $ 604.00
Err:522
4 $ 539.00
Err:522
5 $ 470.00
Err:522
6 and beyond $ 529.00
Err:522 ! Commitment beyond year 6 converted into an annuity for ten years
Debt Value of leases =
Err:522
Restated Financials
Depreciation on Operating Lease Asset =
Adjustment to Operating Earnings =
Adjustment to Total Debt outstanding =
Adjustment to Depreciation =
Err:522 ! I use straight line depreciation
Err:522 ! Add this amount to pretax operating incom
Err:522 ! Add this amount to debt
Err:522
nverter
Please enter them.
tic rating estimator
over the first five years
f expenses in yr 6
nnuity for ten years
I use straight line depreciation
Add this amount to pretax operating income
Add this amount to debt
Estimation of Current Cost of Capital
Inputs
Equity
Number of Shares outstanding =
Current Market Price per share =
463.01
$ 287.06
Approach for estimating beta
If direct input, enter levered beta (or regression beta)
Unlevered beta =
Riskfree Rate =
What approach do you want to use to input ERP?
Direct input for ERP (if you choose "will input"
Equity Risk Premium used in cost of equity =
Multibusiness(Global)
1.20
1.12
2.20%
Operating regions
5.75%
5.56%
Debt
Book Value of Straight Debt =
Interest Expense on Debt =
Average Maturity =
Approach for estimating pretax cost of debt
If direct input, input the pretax cost of debt
If actual rating, input the rating
If synethetic rating, input the type of company
Pretax Cost of Debt =
Tax Rate =
Book Value of Convertible Debt =
Interest Expense on Convertible =
Maturity of Convertible Bond =
Market Value of Convertible =
Debt value of operating leases =
Preferred Stock
Number of Preferred Shares =
Current Market Price per Share=
Annual Dividend per Share =
0
70
5
Output
Estimating Market Value of Straight Debt =
Estimated Value of Straight Debt in Convertible =
Value of Debt in Operating leases =
Estimated Value of Equity in Convertible =
Levered Beta for equity =
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Market Value
Weight in Cost of Capital
Cost of Component
Operating Regions ERP calculator
Region
Revenues
ERP
Africa
Asia
Australia & New Zealand
Caribbean
Central and South America
Eastern Europe & Russia
Middle East
North America
36722
Western Europe
Rest of the World
22937
Total
59659
Multi Business (Global Industry Averages)
Business
Revenues
EV/Sales
Retail (Internet)
$ 40,248.00
3.1883
Entertainment
$ 15,555.00
2.8095
Business & Consumer Serv $ 3,856.00
1.3880
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
Company
Inputs for synthetic rating estimation
Please read the special cases worksheet (see below) before you use this spreadsheet.
Before you use this spreadsheet, make sure that the iteration box (under calculation options in excel) is checked.
Enter the type of firm =
1
Enter current Earnings before interest and taxes (EBIT) =
Enter current interest expenses =
Enter long term risk free rate =
Output
Err:522
Interest coverage ratio =
Estimated Bond Rating =
Err:522
Err:522
Estimated Company Default Spread =
0.00%
Estimated County Default Spread (if any) =
Err:522
Estimated Cost of Debt =
Err:522 (Add back only long term interest expense f
Err:522 (Use only long term interest expense for fina
2.20%
Note: If you get REF! All over the place, set the
to No, and then reset it to Yes. It should work.
If you want to update the spreads listed below, please visit http://www.bondsonline.com
For large manufacturing firms
If interest coverage ratio is
>
≤ to
Rating is
Spread is
100000
0.199999
12.00%
D2/D
0.2
0.649999
10.50%
Caa/CCC
0.65
0.799999
9.50%
Ca2/CC
0.8
1.249999
8.75%
C2/C
1.25
1.499999
7.25%
B3/B1.5
1.749999
6.50%
B2/B
1.75
1.999999
5.50%
B1/B+
2
2.2499999
4.00%
Ba2/BB
2.25
2.49999
3.00%
Ba1/BB+
2.5
2.999999
2.00%
Baa2/BBB
3
4.249999
1.30%
A3/A4.25
5.499999
1.00%
A2/A
5.5
6.499999
0.85%
A1/A+
6.5
8.499999
0.70%
Aa2/AA
8.50
100000
0.40%
Aaa/AAA
For smaller and riskier firms
If interest coverage ratio is
greater than
≤ to
100000
0.499999
0.5
0.799999
0.8
1.249999
1.25
1.499999
1.5
1.999999
2
2.499999
2.5
2.999999
3
3.499999
3.5
3.9999999
Rating is
D2/D
Caa/CCC
Ca2/CC
C2/C
B3/BB2/B
B1/B+
Ba2/BB
Ba1/BB+
Country
Marginal tax rate
Abu Dhabi
19.22%
Albania
10.00%
Andorra
21.21%
Angola
35.00%
Anguilla
28.10%
Argentina
35.00%
Armenia
20.00%
Aruba
28.00%
Australia
30.00%
Austria
25.00%
Azerbaijan
16.38%
Bahamas
0.00%
Bahrain
0.00%
Bangladesh
27.50%
Barbados
25.00%
Belarus
18.00%
Belgium
33.99%
Belize
26.88%
Benin
28.10%
Bermuda
0.00%
Bolivia
25.00%
Bosnia and Herzegovi
10.00%
Botswana
22.00%
Brazil
34.00%
British Virgin Islands
14.92%
Bulgaria
10.00%
Burkina Faso
28.10%
Cambodia
20.00%
Cameroon
28.10%
Canada
26.00%
Cape Verde
28.10%
Cayman Islands
0.00%
Channel Islands
0.00%
Chile
20.00%
China
25.00%
Colombia
25.00%
Cook Islands
0.00%
Costa Rica
30.00%
Croatia
20.00%
Cuba
14.92%
Curacao
27.50%
Cyprus
12.50%
Czech Republic
19.00%
Democratic Republic
28.10%
Denmark
25.00%
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Falkland Islands
Fiji
Finland
France
Gabon
Georgia
Germany
Ghana
Greece
Greenland
Guatemala
Honduras
Hong Kong
Hungary
Iceland
India
Indonesia
Ireland
Isle of Man
Israel
Italy
Ivory Coast
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Kuwait
Kyrgyzstan
Laos
Latvia
Lebanon
Liechtenstein
Lithuania
Luxembourg
Macau
Macedonia
Malawi
Malaysia
Malta
Marshall Islands
Mauritius
Mexico
Moldova
Monaco
Mongolia
Montenegro
Montserrat
Morocco
Mozambique
Namibia
Netherlands
Netherlands Antilles
New Zealand
Nicaragua
Niger
Nigeria
Norway
Oman
Pakistan
Palestinian Authority
Panama
Papua New Guinea
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Ras Al Kaminah
Republic of the Cong
Reunion
Romania
Russia
Rwanda
Saudi Arabia
Senegal
Serbia
Sierra Leone
Singapore
Slovakia
Slovenia
South Africa
South Korea
Spain
Sri Lanka
St. Maarten
St. Vincent & the Gre
Sudan
Suriname
Sweden
Switzerland
Taiwan
Tanzania
Thailand
Togo
Trinidad & Tobago
Tunisia
Turkey
Turks & Caicos Islan
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Zambia
Zimbabwe
Region
El Salvador
Estonia
Fiji
Finland
France
Gabon
Georgia
Germany
Ghana
Greece
Guatemala
Honduras
Hong Kong
Hungary
Iceland
India
Indonesia
Ireland
Isle of Man
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea
Kuwait
Latvia
Lebanon
Liechtenstein
Lithuania
Luxembourg
Macao
Macedonia
Malaysia
Malta
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Montserrat
Morocco
Mozambique
Namibia
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Papua New Guinea
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Ras Al Kaminah
Republic of the Congo
Romania
Russia
Rwanda
Saudi Arabia
Senegal
Serbia
Singapore
Slovakia
Slovenia
South Africa
Spain
Sri Lanka
St. Maarten
St. Vincent & the Grena
Suriname
Sweden
Switzerland
Taiwan
Thailand
Trinidad and Tobago
Tunisia
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States of Americ
Uruguay
Venezuela
Region
Weighted AverageWeighted Average: TRP
Africa
3.36%
Asia
1.00%
Australia & New Zealand
0.00%
Caribbean
5.10%
Central and South Americ
2.42%
Eastern Europe & Russia
1.98%
Middle East
0.76%
North America
0.00%
Western Europe
0.86%
Rest of the World
1.35%
Country Risk Premium Region
5.75%
0.75%
Middle East
11.75%
6.75%
Eastern Europe & Russia
6.80%
1.80%
Western Europe
10.40%
5.40%
Africa
14.75%
9.75%
Central and South America
9.50%
4.50%
Eastern Europe & Russia
7.40%
2.40%
Caribbean
5.00%
0.00%
Australia & New Zealand
5.00%
0.00%
Western Europe
8.30%
3.30%
Eastern Europe & Russia
7.40%
2.40%
Caribbean
7.85%
2.85%
Middle East
10.40%
5.40%
Asia
8.75%
3.75%
Caribbean
14.75%
9.75%
Eastern Europe & Russia
5.90%
0.90%
Western Europe
18.50%
13.50%
Central and South America
13.25%
8.25%
Africa
5.90%
0.90%
Caribbean
10.40%
5.40%
Central and South America
14.75%
9.75%
Eastern Europe & Russia
6.28%
1.28%
Africa
7.85%
2.85%
Central and South America
7.85%
2.85%
Eastern Europe & Russia
13.25%
8.25%
Africa
13.25%
8.25%
Asia
13.25%
8.25%
Africa
5.00%
0.00%
North America
13.25%
8.25%
Africa
5.90%
0.90%
Caribbean
5.90%
0.90%
Central and South America
5.90%
0.90%
Asia
8.30%
3.30%
Central and South America
11.75%
6.75%
Australia & New Zealand
8.30%
3.30%
Central and South America
8.75%
3.75%
Eastern Europe & Russia
16.25%
11.25%
Caribbean
11.75%
6.75%
Caribbean
20.00%
15.00%
Western Europe
6.05%
1.05%
Eastern Europe & Russia
14.75%
9.75%
Africa
5.00%
0.00%
Western Europe
11.75%
6.75%
Caribbean
16.25%
11.25%
Central and South America
16.25%
11.25%
Africa
Central and South America
Eastern Europe & Russia
Asia
Western Europe
Western Europe
Africa
Eastern Europe & Russia
Western Europe
Africa
Western Europe
Central and South America
Central and South America
Asia
Eastern Europe & Russia
Western Europe
Asia
Asia
Western Europe
Western Europe
Middle East
Western Europe
Caribbean
Asia
Middle East
Eastern Europe & Russia
Africa
Asia
Middle East
Eastern Europe & Russia
Middle East
Western Europe
Eastern Europe & Russia
Western Europe
Asia
Eastern Europe & Russia
Asia
Western Europe
Asia
Central and South America
Eastern Europe & Russia
Asia
Eastern Europe & Russia
Caribbean
Africa
Africa
Africa
Western Europe
Australia & New Zealand
Central and South America
Africa
Western Europe
Middle East
Asia
Central and South America
Asia
Central and South America
Central and South America
Asia
Eastern Europe & Russia
Western Europe
Middle East
Middle East
Africa
Eastern Europe & Russia
Eastern Europe & Russia
Africa
Middle East
Africa
Eastern Europe & Russia
Asia
Eastern Europe & Russia
Eastern Europe & Russia
Africa
Western Europe
Asia
Caribbean
Caribbean
Central and South America
Western Europe
Western Europe
Asia
Asia
Caribbean
Africa
Western Europe
Africa
Eastern Europe & Russia
Middle East
Western Europe
North America
Central and South America
Central and South America
Last 10K
$74,452.00
$6,565.00
$745.00
$141.00
$9,746.00
$5,181.00
Revenues
Technology & Media content
Operating income or EBIT
Interest expenses
Book value of equity
Book value of debt
Do you have operating lease commitments?
Cash and cross holdings
$12,447.00
Non-operating assets
$0.00
Minority interests
$0.00
Number of shares outstanding =
Current stock price =
Effective tax rate =
31.80%
Marginal tax rate =
Lease commitments
Year 1
$752.00
Year 2
$654.00
Year 3
$604.00
Year 4
$539.00
Year 5
$470.00
Beyond year 5
$2,116.00
First X months: Last year
$48,865.00
$4,703.00
$235.00
$102.00
22.31%
First X months: Current yearTrailing 12 month
$59,659.00
$85,246.00
$6,639.00
$8,501.00
-$412.00
$98.00
$136.00
$175.00
$10,336.00
$5,089.00
$10,252.00
$0.00
$0.00
31.80%
NA
NA
NA
NA
NA
NA
Yes/No Book or Market Value ERP choices
Yes
B
Will input
No
V
Country of incorporatio
Operating countries
Operating regions
Cost of debt Synthetic rati Beta
Direct input
1 Direct input
Synthetic rati
2 Single Busine
Actual rating
Single Busine
Multibusiness
Multibusiness
Operating Margin
25th (Large US retail)
Median (Large US retail)
75th (Large US retail)
25th (US retail & media)
Median (US retail & media)
75th (US retail & media)