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  • Tata Consultancy Services Capital Structure: By-Siddharth Sharma J034 Prachi Sharma J035

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    SiddharthThapar
    10 просмотров16 страниц
    This document contains calculations related to Tata Consultancy Services' capital structure for the fiscal year 2008-2009. It calculates the company's share capital, total debt, weights of equity and debt, growth rate, cost of equity and debt, EBIT, net income, and firm valuation using the net income and net operating income approaches. The calculations show TCS had equity share capital of Rs. 85.1 crores, total debt of Rs. 2664.5 crores, cost of equity of 23.3%, cost of debt of 2.93%, and valuation estimates that vary slightly based on interest and leverage assumptions.

    Исходное описание:

    Finance

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    FM SID

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    This document contains calculations related to Tata Consultancy Services' capital structure for the fiscal year 2008-2009. It calculates the company's share capital, total debt, weights of equity and debt, growth rate, cost of equity and debt, EBIT, net income, and firm valuation using the net income and net operating income approaches. The calculations show TCS had equity share capital of Rs. 85.1 crores, total debt of Rs. 2664.5 crores, cost of equity of 23.3%, cost of debt of 2.93%, and valuation estimates that vary slightly based on interest and leverage assumptions.

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    © All Rights Reserved
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    10 просмотров16 страниц

    Tata Consultancy Services Capital Structure: By-Siddharth Sharma J034 Prachi Sharma J035

    Загружено:

    SiddharthThapar
    This document contains calculations related to Tata Consultancy Services' capital structure for the fiscal year 2008-2009. It calculates the company's share capital, total debt, weights of equity and debt, growth rate, cost of equity and debt, EBIT, net income, and firm valuation using the net income and net operating income approaches. The calculations show TCS had equity share capital of Rs. 85.1 crores, total debt of Rs. 2664.5 crores, cost of equity of 23.3%, cost of debt of 2.93%, and valuation estimates that vary slightly based on interest and leverage assumptions.

    Авторское право:

    © All Rights Reserved
    Скачайте в формате PPTX, PDF, TXT или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 16

    TATA CONSULTANCY SERVICES

    CAPITAL STRUCTURE
    BySiddharth Sharma

    J034

    Prachi Sharma

    J035

    Calculating Share Capital and Debt


    Equity Share Capital= Rs. 85.1 crores
    Preference Share Capital= Rs. 0
    Total Share Capital= Equity Share Capital + Preference Share Capital
    = Rs. 85.1 crores

    Total Debt= Rs.2664.5 crores

    Calculating We and Wd
    Weight of equity (We) = total equity/(total equity + total debt)
    = (85.1) / (85.1 + 2664.50)
    = 0.031

    Weight of debt (Wd) = total debt/(total equity+ total debt)


    = (2664.5) / (85.1 + 2664.50)
    = 0.969

    Calculating Growth Rate (g)


    Dn = D0 (1 + g)n
    For n = 5, for the year 2013 - 2014.

    Thus D0 is for the financial year 2008-09

    D5 = D0 (1 + g)5
    18 = 6.25 ( 1+ g )5
    g = 0.2302 or 23.02 %

    Calculating Ke
    Dividend per share (D0) = Rs.6.25
    Market Price (MP) = Rs. 2708.75

    Ke = {D0(1+g) / MP} + g
    = {6.25(1+ 0.2302 ) / 2708.75} + 0.232
    = 0.2330 or 23.3 %

    Calculating Kd
    Interest = Rs. 78.2903 crore

    Kd = ( Interest) / ( Value of debt)


    = ( 78.2903) / (2664.5)
    = or 2.93 %

    Calculating Ko
    Tax Rate (T) = 0.239 or 23.9 %

    K0 = KeWe + (1 T) KdWd
    = (0.2330*0.031) + (1- 0.054)* (0.293)* (0.9690)
    = 0.0072 + 0.0269
    =3.41 % or 0.0341

    Calculating EBIT / PBIT


    PBDIT = Rs. 24648.43 crore
    Depreciation (D) = Rs. 1080.55 crore

    PBIT = PBDIT D
    = 24648.43 - 1080.55
    = 23567.88 crore

    Net Income Approach


    Ke is constant.
    Kd is constant.
    K0 decreases/increases as leverage increases/decreases.

    Net Income Approach


    Given:
    1. Interest = 23.41 crore
    Calculated:
    2. Kd = 0.2610 or 26.10 %
    3. Ke = 0.1382 or 13.82 %

    Net Income Approach


    PBIT

    23567.88

    23567.88

    23567.88

    Interest (I)

    3.41 (ASSUMED)

    23.41

    93.41 (ASSUMED)

    Equity Earning

    23564.47

    23544.47

    23474.47

    Ke

    13.82 %

    13.82 %

    13.82 %

    Value of equity

    170509.9132

    170365.1954

    169858.6831

    Kd

    26.10 %

    26.10 %

    26.10 %

    Value of Debt

    13.065

    89.69

    357.89

    Value of Firm

    170522.9782

    170454.8854

    170216.5731

    Net Operating Income Approach


    Kd is constant.
    K0 is constant.
    Ke decreases/increases as leverage decreases/increases.

    Net Operating Income Approach


    Given:
    1. Interest = 23.41 crore
    Calculated:
    2. Kd = 0.2610 or 26.10 %
    3. K0 = 0.1572 or 15.72 %

    Net Operating Income Approach


    PBIT

    23567.88

    23567.88

    23567.88

    Interest (I)

    3.41 (ASSUMED)

    23.41

    93.41 (ASSUMED)

    Equity Earning

    23564.47

    23544.47

    23474.47

    K0

    15.72 %

    15.72 %

    15.72 %

    Value of Firm

    149901.2087

    149773.9822

    149328.6896

    Kd

    26.10 %

    26.10 %

    26.10%

    Value of Debt

    13.065

    89.69

    357.89

    Value of Equity

    149888.1437

    149684.2922

    148970.7996

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