Value and Financial Modeling:
A Case Analyze
19-1. You want to compare Ideko's profitability to its competitors' profitability making use of the EBITDA/sales multiple. Given Ideko's current revenue of $75 million, use the information in Table 19. 2 to compute a variety of EBITDA for Ideko assuming it truly is run as profitably as its competitors. Ideko's 2005 revenue are $75 million.
Get the highest and lowest EBITDA values around all three businesses and the industry as a whole:
EBITDA/Sales (%)EBITDA ($ mil)
Oakley17. 012. seventy five
Luxcottica18. 513. 875
Nike15. 911. 925
Industry12. 19. 075
This implies an EBITDA range of $9. 075 to $13. 875 million.
19-2. Assume that Ideko's market share will increase by 0. 5% each year rather than the 1% used in the chapter. What production ability will Ideko require annually? When will certainly an expansion become required (when development volume is going to exceed the existing level by 50%)? Initially compute the projected total annual market share:
Employing these predictions, calculate the projected total annual production quantity:
Based on these types of estimates, it can be 2010 prior to current capacity is surpass and an expansion becomes necessary. 19-3. Under the assumption that Ideko business will increase by simply 0. five per cent per year, you determine which the plant will require an development in 2010. The price of this expansion will be $15 million. Assuming the auto financing of the expansion will be late accordingly, determine the projected interest payments plus the amount with the projected fascination tax shields (assuming that the interest rates for the term loans remain exactly like in the chapter) through 2010.
19-4. Under the assumption that Ideko's market share will increase simply by 0. five per cent per year (and the investment and financing will be tweaked as described in Trouble 3), you project the next depreciation:
Using this information, project net income through 2010 (that is, recreate Table nineteen. 7 beneath the new assumptions).
19-5. Within the assumptions that Ideko's business will increase by simply 0. 5% per year (implying that the expenditure, financing, and depreciation will probably be adjusted while described in Problems 3 and 4) and that the forecasts in Stand 19. almost eight remain the same, calculate Ideko's working capital requirements though 2010 (that is usually, reproduce Desk 19. 9 under the fresh assumptions).
19-6. Under the assumptions that Ideko's market share will increase by zero. 5% each year (implying the fact that investment, funding, and depreciation will be tweaked as defined in Complications 3 and 4) yet that the forecasted improvements in net working capital do not transpire (so the numbers in Table nineteen. 8 continue to be at their 2005 levels through 2010), calculate Ideko's working capital requirements though 2010 (that is definitely, reproduce Desk 19. being unfaithful under these types of assumptions).
19-7. Forecast Ideko's free income (reproduce Table 19. 10), assuming Ideko's market share increases by zero. 5% per year; investment, loans, and downgrading will be adjusted accordingly; plus the projected improvements in working capital occur (that is, beneath the assumptions in Problem 5).
19-8. Forecast Ideko's totally free cash flow (reproduce Table 19. 10), if, perhaps Ideko's business will increase by 0. 5% per year; investment, financing, and depreciation will be adjusted consequently; and the expected improvements in working capital will not occur (that is, within the assumptions in Problem 6).
19-9. Replicate Ideko's balance sheet and assertion of cash moves, assuming Ideko's market share will increase by zero. 5% annually; investment, auto financing, and depreciation will be tweaked accordingly; and the projected improvements in working capital occur (that is, beneath the assumptions in Problem 5).
19-10. Duplicate Ideko's balance sheet and affirmation of cash runs, assuming Ideko's market share will increase by zero. 5% per year; investment, funding, and downgrading will be modified accordingly; and the projected improvements in working capital do not arise (that is, under the...