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Module 4&5: Simple Forecasting Catalog & Mail order houses industry

Module 4&5: Simple Forecasting Catalog & Mail order houses industry. Outline. Background of Industry & eBay Estimating Sales Growth, EPM, and EATO Forecast Sales, EPAT, and NEA Valuing the Company by Discounted Cash Flows. Industry Definition.

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Module 4&5: Simple Forecasting Catalog & Mail order houses industry

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  1. Module 4&5: Simple Forecasting Catalog & Mail order houses industry

  2. Outline Background of Industry & eBay Estimating Sales Growth, EPM, and EATO Forecast Sales, EPAT, and NEA Valuing the Company by Discounted Cash Flows

  3. Industry Definition Comprised of companies that sell products through “non-store” channels, including catalogs, online sales, television, and radio Products and services are delivered through the mail Companies in this industry typically have low amounts of inventory and commonly act as the “middle-man” in sales transactions Source: business.highbeam.com

  4. eBay • Transaction based business model • Marketplace • eBay.com • StubHub.com and other small websites • Payments • PayPal • Bill Me Later • Marketing, Classifieds, Advertising Services • eBay Enterprises

  5. Return on Enterprise Operations

  6. Splitting Up RNEA

  7. Forecasting 1. Forecast revenues via forecasts of sales growth 2. Forecast EPAT via forecasts of EPM 3. Forecast NEA via forecasts of EATO

  8. Revenues Assume: 14.0%

  9. EPM (from Sales) Assume: 17.0%

  10. EATO Assume: 1.18

  11. Parsimonious Assumptions Sales growth rate 14.0% Enterprise profit margin (EPM) 17.0% Enterprise asset turnover (EATO) 1.18

  12. Parsimonious Assumptions Sales growth rate 14.0% Enterprise profit margin (EPM) 17.0% Enterprise asset turnover (EATO) 1.18

  13. Parsimonious Assumptions Sales growth rate 14.0% Enterprise profit margin (EPM) 17.0% Enterprise asset turnover (EATO) 1.18

  14. Parsimonious Assumptions Sales growth rate 14.0% Enterprise profit margin (EPM) 17.0% Enterprise asset turnover (EATO) 1.18

  15. Module 5: valuation using cash flows Catalog & Mail order houses industry

  16. Forecast of FCF

  17. Valuing eBay with DCF Estimate of enterprise cost of capital: 10.1% Estimated growth rate beyond 2018: 7.0%

  18. Discounted Cash Flow Model

  19. Discounted Cash Flow Model

  20. Questions?

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