FMVA Practice Exam Case Study #1 May 2021

 

  MVA Practice Exam Case Study #1 May 2021 Notes This Excel model is for for educational purposes only and should not be used for any othe  All content is Copyright material of CFI Education Inc. https://corporatefinanceinstitute.com/

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Model Inputs and Assumptions  All Figures in US$000's US$000's unless otherwise otherwise stated.

Model Inputs and Assumptions General Assumptions Transaction Date Forecast Start Date Fiscal Year-End Days Per Year 

Income and Expense orecast Assumptions (2021E) Sales Growth Gross Margin SG&A Expense Depreciation Expense Capital Expenditures

Balance Sheet orecast Assumptions (2021E)  Accounts Receivable Days Outstanding Outstanding  Accounts Payable Days Outstanding Outstanding

Valuation Assumptions Tax Rate EBITDA Exit Multiple Equity Risk Premium Interest Rate

6/15/2024 1/1/2021 12/31/2021 365

2.50%

3.0x

36.0 97.0

27.50% 10.0x 8.5% 5.5%

 

© Corporate Finance Institute. All rights reserved.

Historical and orecast inancial Information  All Figures in US$000's unless otherwise otherwise stated.

2018A

2019A

$50,000 ($22,500) $27,500 ($3,750) ($4,250) $19,500 ($5,363) $14,138

$45,000 ($22,500) $22,500 50.0% ($3,375) ($3,825) $15,300 ($4,895) $10,405

Assets Cash & Cash Equivalents  Accounts Receivable Total Current Assets

$36,388 $5,000 $41,388

$35,494 $4,438 $39,933

Property, Plant & Equipment Total Assets

$23,750 $65,138

$34,925 $74,858

Liabilities  Accounts Payable Total Current Liabilities

$6,000 $6,000

$5,315 $5,315

Long-Term Debt Total Liabilities

$0 $6,000

$0 $5,315

$45,000 $14,138 $59,138 $65,138

$45,000 $24,543 $69,543 $74,858

$14,138

$10,405

$4,250 $0 $18,388

$3,825 ($123) $14,107

Income Statement Sales Revenue Cost of Sales Gross Profit SG&A Expense Depreciation Expense Income Before Income Taxes Income Taxes Net Income

Balance Sheet

Shareholders' Equity Share Capital Retained Earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity

Cash low Statement Operating Activities Net Income  Adjustments For: Depreciation Expense Changes in Non-Cash Working Capital Cash Generated rom Operating Activities

Investing Activities

 

($27,000) ($27,000)

($15,000) ($15,000)

  inancing Activities Issuance (Repayment) of Debt Issuance (Buy-back) of Equity Cash (Used or) Generated rom inancing Activities

$0 $45,000 $45,000

$0 $0 $0

Cash (Used) Generated in the Period Cash & Cash Equivalents, Beginning of Period Cash & Cash Equivalents, End of Period

$36,388 $0 $36,388

($893) $36,388 $35,494

$5,000 $6,000 ($1,000)

$4,438 $5,315 ($877) ($123)

$1,000 $27,000 ($4,250) $23,750

$23,750 $15,000 ($3,825) $34,925

$23,750

$19,125

66..91xx 0.39x 2.75x

76..57xx 0.34x 1.25x

 Additions to Property, Plant & Equipment Cash (Used or) Investing Activities

Supporting Schedules Change in Non-Cash Working Capital  Accounts Receivable  Accounts Payable Total Non-Cash Working Capital Change in Non-Cash Working Capital Asset Continuity Schedule PP&E, Opening Balance Capital Expenditures Depreciation Expense PP&E, Ending Balance

Supplemental Information EBITDA CausrrhenRtaRtiaotio C Margin Impact Ratio Cash Turnover Ratio

 

2020A

2021E

2022E

2023E

2024E

2025E

2026E

2027E

$48,000 ($26,400) $21,600 45.0% ($3,600) ($4,080) $13,920 ($4,488) $9,432

$49,200 $25,830 $23,370 47.5% ($3,690) ($4,182) $15,498 ($4,262) $11,236

$50,430 $27,737 $22,694 45.0% ($3,782) ($4,287) $14,625 ($4,022) $10,603

$51,691 $29,722 $21,969 42.5% ($3,877) ($4,394) $13,698 ($3,767) $9,931

$52,983 $31,790 $21,193 40.0% ($3,974) ($4,504) $12,716 ($3,497) $9,219

$54,308 $33,942 $20,365 37.5% ($4,073) ($4,616) $11,676 ($3,211) $8,465

$55,665 $36,182 $19,483 35.0% ($4,175) ($4,732) $10,576 ($2,909) $7,668

$57,057 $38,513 $18,543 32.5% ($4,279) ($4,850) $9,414 ($2,589) $6,825

$34,773 $4,734 $39,508

$38,319 $4,853 $43,172

$41,048 $4,974 $46,022

$42,917 $5,098 $48,015

$43,880 $5,226 $49,106

$43,892 $5,356 $49,249

$42,905 $5,490 $48,395

$40,867 $5,628 $46,495

$45,845 $85,353

$53,903 $97,075

$62,162 $108,185

$70,628 $118,643

$79,306 $128,412

$88,200 $137,449

$97,317 $145,712

$106,662 $153,157

$6,378 $6,378

$6,864 $6,864

$7,371 $7,371

$7,899 $7,899

$8,448 $8,448

$9,020 $9,020

$9,616 $9,616

$10,235 $10,235

$0 $6,378

$0 $6,864

$0 $7,371

$0 $7,899

$0 $8,448

$0 $9,020

$0 $9,616

$0 $10,235

$45,000 $33,975 $78,975 $85,353

$45,000 $45,211 $90,211 $97,075

$45,000 $55,813 $100,813 $108,185

$45,000 $65,745 $110,745 $118,643

$45,000 $74,964 $119,964 $128,412

$45,000 $83,429 $128,429 $137,449

$45,000 $91,097 $136,097 $145,712

$45,000 $97,922 $142,922 $153,157

$9,432

$11,236

$10,603

$9,931

$9,219

$8,465

$7,668

$6,825

$4,080 $767 $14,279

$4,182 $368 $15,786

$4,287 $385 $15,275

$4,394 $403 $14,728

$4,504 $422 $14,145

$4,616 $441 $13,523

$4,732 $461 $12,861

$4,850 $482 $12,157

($15,000) ($15,000)

($12,240) ($12,240)

($12,546) ($12,546)

($12,860) ($12,860)

($13,181) ($13,181)

($13,511) ($13,511)

($13,848) ($13,848)

($14,195) ($14,195)

$0 $0 $0

$$00 $0

$$00 $0

$$00 $0

$$00 $0

$$00 $0

$$00 $0

$$00 $0

($721) $35,494 $34,773

$3,546 $34,773 $38,319

$2,729 $38,319 $41,048

$1,869 $41,048 $42,917

$963 $42,917 $43,880

$12 $43,880 $43,892

($988) $43,892 $42,905

($2,037) $42,905 $40,867

$4,734

$4,853

$4,974

$5,098

$5,226

$5,356

$5,490

$5,628

$6,378 ($1,644) $767

($$26,0,81624) $368

($$27,3,39771) $385

($$27,8,80919) $403

($$38,2,42438) $422

($$39,6,06240) $441

($$49,1,62156) $461

($$140,6,20385) $482

$34,925 $15,000 ($4,080) $45,845

$45,845 $12,240 ($4,182) $53,903

$53,903 $12,546 ($4,287) $62,162

$62,162 $12,860 ($4,394) $70,628

$70,628 $13,181 ($4,504) $79,306

$79,306 $13,511 ($4,616) $88,200

$88,200 $13,848 ($4,732) $97,317

$97,317 $14,195 ($4,850) $106,662

$18,000

$19,680

$18,911

$18,092

$17,219

$16,292

$15,308

$14,264

6.2x 5.5x 0.29x 1.37x

6.3x 5.6x 0.32x 1.35x

6.2x 5.6x 0.29x 1.27x

6.1x 5.4x 0.27x 1.23x

5.8x 5.2x 0.24x 1.22x

5.5x 4.9x 0.22x 1.24x

5.0x 4.5x 0.19x 1.28x

4.5x 4.0x 0.17x 1.36x

 

 

 

 

 

2028E

2029E

2030E

$58,483 $40,938 $17,545 30.0% ($4,386) ($4,971) $8,188 ($2,252) $5,936

$59,945 $43,460 $16,485 27.5% ($4,496) ($5,095) $6,894 ($1,896) $4,998

$61,444 $46,083 $15,361 25.0% ($4,608) ($5,223) $5,530 ($1,521) $4,009

$37,729 $5,768 $43,497

$33,435 $5,912 $39,347

$27,930 $6,060 $33,990

$116,241 $159,738

$126,059 $165,406

$136,122 $170,112

$10,880

$11,550

$12,247

$10,880

$11,550

$12,247

$0 $10,880

$0 $11,550

$0 $12,247

$45,000 $103,858 $148,858 $159,738

$45,000 $108,856 $153,856 $165,406

$45,000 $112,865 $157,865 $170,112

$5,936

$4,998

$4,009

$4,971 $504 $11,411

$5,095 $526 $10,619

$5,223 $549 $9,781

($14,550) ($14,550)

($14,913) ($14,913)

($15,286) ($15,286)

$0 $0 $0

$0 $0 $0

$0 $0 $0

($3,139) $40,867 $37,729

($4,294) $37,729 $33,435

($5,505) $33,435 $27,930

$5,768 $10,880 ($5,111) $504

$5,912 $11,550 ($5,637) $526

$6,060 $12,247 ($6,186) $549

 

$106,662 $14,550 ($4,971) $116,241

$116,241 $126,059 $14,913 $15,286 ($5,095) ($5,223) $126,059   $136,122

$13,159

$11,989

$10,753

4.0x 3.5x 0.14x 1.49x

3.4x 2.9x 0.12x 1.68x

2.8x 2.3x 0.09x 2.00x

 

 

© Corporate Finance Institute. All rights reserved.

Valuation and Return Analysis  All Figures in US$000's unless otherwise otherwise stated.

DC Analysis Time Periods Date Date for NPV (Annual Cash Flows) Year Fraction EBITDA Terminal Value Unlevered ree Cash low EBITDA

Depreciation EBIT Unlevered Taxes Depreciation Capital Expenditures Change in Non-Cash Working Capital Unlevered ree Cash low  Adjusted Unlevered Free Cash Flow Terminal Value Total Adjusted Unlevered ree Cash low Net Present Value (NPV) Present Value of Free Cash Flows Present Value of Terminal Value Total Net Present Value (NPV)  Add: Cash Less: Debt Equity Value

Investment Analysis Date Date for NPV (Annual Cash Flows) Year Fraction Unlevered ree Cash low  Adjusted Unlevered Free Cash Flow Terminal Value Total Adjusted Unlevered ree Cash low Net Present Value (NPV)

 

Present Value of Free Cash Flows Present Value of Terminal Value Total Net Present Value (NPV)  Add: Cash Less: Debt Equity Value Investor IRR Investment Amount  Adjusted Unlevered Free Cash Flow Investment Cash lows Investor IRR

Equity Investment

 Adjusted Unlevered Free Cash Flow Investment Cash lows Equity IRR

 

2021E

2022E

2023E

2024E

2025E

2026E

2027E

1/1/2021 1/1/2021 0

$0 $0 $0

12/31/2021 7/2/2021 1.0

12/31/2022 7/1/2022 1.0

12/31/2023 7/1/2023 1.0

12/31/2024 7/1/2024 1.0

12/31/2025 7/1/2025 1.0

12/31/2026 7/1/2026 1.0

12/31/2027 7/1/2027 1.0

$19,680 $0

$18,911 $0

$18,092 $0

$17,219 $0

$16,292 $0

$15,308 $0

$14,264 $0

$19,680 ($4,182) $15,498 ($4,262) $4,182

$18,911 ($4,287) $14,625 ($4,022) $4,287

$18,092 ($4,394) $13,698 ($3,767) $4,394

$17,219 ($4,504) $12,716 ($3,497) $4,504

$16,292 ($4,616) $11,676 ($3,211) $4,616

$15,308 ($4,732) $10,576 ($2,909) $4,732

$14,264 ($4,850) $9,414 ($2,589) $4,850

($12,240) $368 $3,546

($12,546) $385 $2,729

($12,860) $403 $1,869

($13,181) $422 $963

($13,511) $441 $12

($13,848) $461 ($988)

($14,195) $482 ($2,037)

$3,546 $0 $3,546

$2,729 $0 $2,729

$1,869 $0 $1,869

$963 $0 $963

$12 $0 $12

($988) $0 ($988)

($2,037) $0 ($2,037)

6/15/2024 6/15/2024 -

12/31/2024 9/22/2024 0.5

12/31/2025 7/1/2025 1.0

12/31/2026 7/1/2026 1.0

12/31/2027 7/1/2027 1.0

$0 $0 $0 $0

$525 $0 $525 $286

$12 $0 $12 $12

($988) $0 ($988) ($988)

($2,037) $0 ($2,037) ($2,037)

11% $920 $37,970 $38,890 $34,773 $0 $73,663

$73,712 $49

 

 

-$9,037 $54,398 $45,361 $50,000

$0 $95,361

($143,041) $0

30.0%

 

$95,102 $259

$286

$12

($988)

($2,037)

($143,041) -6.36%

$286

$12

($988)

($2,037)

($42,912) $0 ($42,912) 12%

$286 $286

$12 $12

($988) ($988)

($2,037) ($2,037)

2028E

2029E

2030E

12/31/2028 7/1/2028 1.0

12/31/2029 7/1/2029 1.0

12/31/2030 7/1/2030 1.0

$13,159 $0

$11,989 $0

$10,753 $107,527

$13,159 ($4,971) $8,188 ($2,252) $4,971 ($14,550) $504 ($3,139)

$11,989 ($5,095) $6,894 ($1,896) $5,095 ($14,913) $526 ($4,294)

$10,753 ($5,223) $5,530 ($1,521) $5,223 ($15,286) $549 ($5,505)

($3,139) $0 ($3,139)

($4,294) $0 ($4,294)

($5,505) $107,527 $102,022

12/31/2028 7/1/2028   1.0

12/31/2029 7/1/2029 1.0

12/31/2030 7/1/2030 1.0

($3,139) $0 ($3,139) ($3,139)

($4,294) $0 ($4,294) ($4,294)

($5,505) $107,527 $102,022 ($5,505)

 

($3,139) ($3,139)

($4,294) ($4,294)

$102,022 $102,022

($3,139) ($3,139)

($4,294) ($4,294)

$102,022 $102,022

 

© Corporate Finance Institute. All rights reserved.

Weighted-Average Cost of Capital (WACC)  All Figures in US$000's US$000's unless otherwise otherwise stated.

Comparable Companies Beta Company Company A Company B Company C Company D Company E Median

Levered Beta 1.87 1.14 1.46 0.92 1.22 1.22

Debt $550 $200 $355 $100 $300

Equity Debt / Equity $800 68.8% $900 22.2% $950 37.4% $850 11.8% $1,200 25.0% 25.0%

Tax Rate 26.5% 30.0% 28.0% 32.5% 35.0%

Unlevered Beta 1.25 0.98 1.15 0.85 1.03 1.03