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Valuation Exercise
Note:
This exercise is designed to help you determine the value of the assigned enterprise. Use assumptions supplied in the
Foreground Reading and in the spreadsheet to estimate free cash flows, a WACC, and terminal values for Bel Vino Corporation
and Starshine Vineyards.
Complete the valuation exercise and submit to your instructor as directed.
M&A in Wine Country
Bel Vino Base Case Valuation: Expanded
Supplementary Schedules
Net Working Capital
working cash 10 10 10 2.8% of sales
A/R 98 99 100 100 days sales outstanding
Inventory 310 291 272 708 days of COGS
Other CA 7 7 7 2.0% of sales
A/P 90 90 90 90 days of cash op expenses
Net working capital 335 317 299
D NWC
Supplementary Schedules
Net Working Capital
working cash 40 30 21
A/R 175 179 181
Inventory 250 262 271
Other CA 33 34 34
A/P 83 85 86
Net working capital 415 419 422
D NWC
Other assets 24 24 24
D Other assets
Discount factor
PV(FCF + TV)
PV Enterprise
Less EOY 2008 Debt 235
Estimated Equity Value
number of shares (000,000s) 8.0
43.8% of sales
20.0% of beginning net PP&E
10.0% of sales
29.0% of sales
4.0% of sales
126 days sales outstanding
430 days of COGS
6.5% of sales
136 days of COGS
4.7% of sales
given
20% of beginning net PP&E