Professional Documents
Culture Documents
Sector multiple 10
Eon premium 10%
Eon multiple 11
Estimated equity value 58,608
Caveat
This answer assumes that we completely agree with the company's definition of Adjusted net income - no
y Valuation
Liabilities
Current Financial Liabilities 9,391
Non Current Financial Liabilities 41,800
Provision for pensions 6,179
Total Liabilities 57,370
Cash and cash equivalent 5,022
Caveat
The question was about identifying the financing assets and liabilities to be included in enterprise value.
As discussed in class, the book values are not necessarily the right numbers to be included in enterprise v
se value: Deutsche Telekom
2009
24,794
9,391
6,304
511
3,369
5,219
61,043
41,800
6,179
2,161
7,153
3,750
85,837
36,354
5,583
41,937
127,774
d in enterprise value.
ncluded in enterprise value
Assignment - Session 3 NWC at Household & Personal Care
Caveat
Both using the broad and narrow definitions of working capital should lead to the conclusion that Henkel is
Using cash conversion ratios would have resulted in the same conclusion.
Operating
Net tangible fixed assets 12,441 14,811 13,626
Goodwill 0 0 0
Other intangible assets 1,656 1,674 1,665
Other fixed assets 1,775 1,797 1,786
Net Working Capital 766 2,966 1,866 *NWC
Other non debt liabilities -1,818 -2,038 -1,928
Invested Capital 14,820 19,210 17,015
Associated investments 0 0 0
Other investments 0 0 0
Total capital employed 14,820 19,210 17,015
Financing
Total common equity 36,950 40,613 38,782
Minority Interests 0 0 0
Net cash/(debt) -22,130 -21,403 -21,767 *Net Cash
Other debt deemed provisions 0 0 0
Net pension asset 0 0 0
Total capital employed 14,820 19,210 17,015
Associated investments 0 0 0
Other investments 0 0 0
Invested Capital 14,820 19,210 17,015
ROIC 94%
Caveats
Return on Invested Capital is calculated on an average invested capital basis rather than year end
Cash is treated as financing rather than operating. Treating cash as operating requires adjustments to NO
onclusion that Henkel is more efficient than Beiersdorf when defined as net working capital as a % of sales
A/R +Inventory+Other Current Assets - Current Liabilities
Cost of Capital
Total Equity 11,996
Total Net Debt 3,534
Equity weighting 77%
Debt weighting 23%
Debt/Equity factor 29%
Unlevered beta 0.90
Corporate Tax Rate 26%
Equity beta 1.10
0.90
26%
4.5%
4.5%
1.5%
Assignment - Session 5 EPS impact and M&A
Cost synergies 0 0 90
EBIT adjusted 3,991 325
COMPONENTS OF WACC
Total Equity 20,000 4,000 6,000
Total Debt 25,000 3,000 3,000
Total Enterprise Value 45,000 7,000 9,000
Caveat
The cost of capital to value the target company should reflect the cost of capital of the target based on th
Combined
13,639
4,316
31.6%
90
4,406
-86
4,320
29%
3,067
1,186
2.59 8.0%
sition value
of the target based on the acquisition value for equity and other components of enterprise value
Assignment - Session 6 DDM - HSBC
Dividends
2010 Dividends per share 0.49
Expected Growth rate 4.0%
Cost of equity
Beta of the stock 1.00
Riskfree rate 4.00%
Risk Premium 4.50%
Cost of Equity 8.5%
1.2
87.3