Module 5 valuation using cash flows
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Module 5: Valuation Using Cash Flows. Brian Phelan. Agenda. Assumptions DCF analysis. Sales Growth Rate. Restructuring Impaired acquisitions Layoffs 5 year plan -> growth by 2015. Industry Sales Growth Rates. Sales Growth Rate. 2014: -5% 2015 and beyond: 2 % .

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Module 5: Valuation Using Cash Flows

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Module 5 valuation using cash flows

Module 5: Valuation Using Cash Flows

Brian Phelan


Agenda

Agenda

  • Assumptions

  • DCF analysis


Sales growth rate

Sales Growth Rate

  • Restructuring

  • Impaired acquisitions

  • Layoffs

  • 5 year plan -> growth by 2015


Industry sales growth rates

Industry Sales Growth Rates


Sales growth rate1

Sales Growth Rate

  • 2014: -5%

  • 2015 and beyond: 2%


Enterprise profit margin from sales

Enterprise Profit Margin from Sales


Industry epm from sales

Industry EPM from Sales


Epm assumption

EPM Assumption

  • Assume: 7.5%

  • HP Average: 7.82%

  • IBM Average: 12.14%

  • MSFT Average: 30.49%

  • Little variation within each firms annual EPM


Enterprise asset turnover

Enterprise Asset Turnover


Industry eato

Industry EATO


Eato assumption

EATO Assumption

  • Assume: 3.86

    • Average HP EATO

  • EATO little annual variation for each firm


Assumption summary

Assumption Summary

  • Sales growth rates:

    • 2014: -5%; 2015 and beyond: 2%

  • Enterprise profit margin: 7.5%

  • Enterprise asset turnover: 3.86


Dcf model

DCF Model


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