Business Valuation

Assumptions
www.excel-skills.com

Start-up

Year 1

Year 2

Year 3

Year 4

Year 5

Turnover

2013 to 2014

Estimated Annual Turnover

262,619,000

6,8% increase from 2013

245980 to 262619

31.0%

81,843 million/262,6 19million

82111 to 81843

Annual Increase %

Gross Profit %
Estimated Gross Profit %

Expenses
Accounting Fees

Advertising & Marketing

16,069,000

Bank Charges

3,000

Cleaning Expenses

6,000

Computer Expenses

4,000

Consumables

15,000

Electricity & Water

12,000

Entertainment

8,000

Equipment Hire

6,000

Insurance

10,000

Legal Fees

4,500

Motor Vehicle Expenses

36,000

Postage

2,000

Printing & Stationery

5,500

Professional Fees

17,000

Rent

120,000

Repairs & Maintenance

11,000

Salaries & Wages

245,000

Security

13,000

Subscriptions

5,800

Telephone & Fax

28,000

Training

18,000

Uniforms

5,000

Add new expense items above this row

Annual Increase %

8.0%

7.0%

10.0%

10.0%

Working Capital
Inventory

150,000

170,000

190,000

200,000

220,000

Debtors

240,000

260,000

300,000

330,000

365,000

245,000
405,000

Creditors

(100,000)

(110,000)

(120,000)

(130,000)

(145,000)

(150,000)

250,000

300,000

Capital Expenditure
Annual Capital Expenses

Acquisition Price & Financing

Business Acquisition Price
Loan Amount
Cost of Debt (annual loan interest rate)
Repayment Period in Years
Required Return on Equity (before taxation)

1,000,000
800,000
9.5%
5
20.0%

Page 1 of 3

Business Valuation
Cash Flow Projection
www.excel-skills.com

Monthly
Average

Year 1

Year 2

Year 3

Year 4

Year 5

Turnover

270,833

3,250,000

3,575,000

3,753,750

3,941,438

4,138,509

Cost of Sales

181,458

2,177,500

2,323,750

2,439,938

2,443,691

2,565,876

Gross Profit

89,375

1,072,500

1,251,250

1,313,813

1,497,746

1,572,634

33.0%

33.0%

35.0%

35.0%

38.0%

38.0%

Accounting Fees

2,000

24,000

25,920

27,734

30,508

33,559

Advertising & Marketing

5,000

60,000

64,800

69,336

76,270

83,897

Bank Charges

250

3,000

3,240

3,467

3,813

4,195

Cleaning Expenses

500

6,000

6,480

6,934

7,627

8,390

Computer Expenses

333

4,000

4,320

4,622

5,085

5,593

Consumables

1,250

15,000

16,200

17,334

19,067

20,974

Electricity & Water

1,000

12,000

12,960

13,867

15,254

16,779

Entertainment

667

8,000

8,640

9,245

10,169

11,186

Equipment Hire

500

6,000

6,480

6,934

7,627

8,390

Insurance

833

10,000

10,800

11,556

12,712

13,983

Gross Profit %
Expenses

Legal Fees

375

4,500

4,860

5,200

5,720

6,292

3,000

36,000

38,880

41,602

45,762

50,338

Postage

167

2,000

2,160

2,311

2,542

2,797

Printing & Stationery

458

5,500

5,940

6,356

6,991

7,691

1,417

17,000

18,360

19,645

21,610

23,771

10,000

120,000

129,600

138,672

152,539

167,793

917

11,000

11,880

12,712

13,983

15,381

20,417

245,000

264,600

283,122

311,434

342,578

1,083

13,000

14,040

15,023

16,525

18,178

483

5,800

6,264

6,702

7,373

8,110

Telephone & Fax

2,333

28,000

30,240

32,357

35,592

39,152

Training

1,500

18,000

19,440

20,801

22,881

25,169

417

5,000

5,400

5,778

6,356

6,991

Total Expenses

54,900

658,800

711,504

761,309

837,440

921,184

Net Profit before Interest & Tax

34,475

413,700

539,746

552,503

660,306

651,449

Changes in Working Capital

(2,500)

(30,000)

(50,000)

(30,000)

(40,000)

(60,000)

Inventory

(1,667)

(20,000)

(20,000)

(10,000)

(20,000)

(25,000)

Debtors

(1,667)

(20,000)

(40,000)

(30,000)

(35,000)

(40,000)

833

10,000

10,000

10,000

15,000

5,000

(250,000)

(300,000)

370,306

291,449

Motor Vehicle Expenses

Professional Fees
Rent
Repairs & Maintenance
Salaries & Wages
Security
Subscriptions

Uniforms

Creditors
Capital Expenditure

Annual Cash Flow

31,975

383,700

489,746

522,503

Page 2 of 3

On
On this
this sheet:
sheet:

This
This five
five year
year annual
annual cash
cash flow
flow projection
projection is
is automatically
automatically compiled
compiled from
from the
the
assumptions
assumptions that
that are
are entered
entered on
on the
the Assumptions
Assumptions sheet.
sheet. The
The only
only user
user
input
input that
that is
is required
required on
on this
this sheet
sheet is
is adding
adding additional
additional rows
rows in
in the
the Expenses
Expenses
section
section ifif additional
additional expense
expense items
items have
have been
been added
added to
to the
the Assumptions
Assumptions
sheet.
sheet.

Business Valuation
Valuation Summary
www.excel-skills.com

Weighted Average Cost of Capital (WACC)

Amount

On
On this
this sheet:
sheet:

Cost

WACC

Equity

200,000

20.0%

20.0%

Debt

800,000

80.0%

9.5%

1,000,000

100.0%

Acquisition Price

4.0%
7.6%

This
This sheet
sheet includes
includes all
all the
the business
business valuation
valuation
calculations.
calculations. The
The WACC
WACC calculation
calculation is
is based
based on
on the
the
input
input assumptions
assumptions that
that are
are specified
specified in
in the
the
Acquisition
Acquisition Price
Price &
& Financing
Financing section
section on
on the
the
Assumptions
Assumptions sheet.
sheet.

11.6%

Cash Flow Calculations

Start-up
Annual Cash Flow Projections

(1,000,000)

Year 1
383,700

Year 2
489,746

Year 3

Business Valuation Calculations

3 Years
Net Present Value (NPV)
Internal Rate of Return (IRR)

520,054

17.7%

31.6%

1,112,964

1,520,054

Estimated Business Valuation:

Based on WACC of 11.6%
Equity

222,593

304,011

Debt

890,371

1,216,043

370,306

Year 5
291,449

The
The net
net present
present value
value (NPV),
(NPV), internal
internal rate
rate of
of return
return (IRR)
(IRR) and
and the
the
estimated
estimated business
business valuation
valuation are
are calculated
calculated for
for both
both aa 33 year
year and
and aa 55
year
year period
period based
based on
on the
the WACC
WACC and
and the
the annual
annual cash
cash flows
flows that
that are
are
compiled
compiled on
on the
the CashFlow
CashFlow sheet.
sheet. The
The net
net cash
cash flow
flow after
after debt
debt
repayment
repayment is
is an
an indication
indication of
of the
the net
net disposable
disposable cash
cash flow.
flow.All
All the
the
calculations
calculations on
on this
this sheet
sheet are
are automated
automated no
no user
user input
input is
is required
required on
on
this
this sheet.
sheet.

5 Years

112,964

Year 4

522,503

Net Cash Flow After Debt Repayment

Year 1
Annual Cash Flow Projections
Annual Debt Repayment
Net Cash Flow After Debt Repayment

Year 2

Year 3

Year 4

Year 5

383,700

489,746

522,503

370,306

291,449

(208,349)

(208,349)

(208,349)

(208,349)

(208,349)

175,351

281,397

314,154

161,957

83,100

Page 3 of 3