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    Kohler DCF

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    Jennifer Langton
    This document contains calculations related to valuing a company using a discounted cash flow approach. It includes calculations of net operating profit after tax, free cash flow, terminal value, weighted average cost of capital, total valuation, and adjustments for lack of control and liquidity. Specifically: 1. It calculates free cash flow for the years 1998-2002 by taking net operating profit after tax plus depreciation and subtracting capital expenditures and changes in working capital. 2. It discounts these cash flows using the weighted average cost of capital to calculate their present value. 3. It calculates a terminal value based on the company's expected perpetual growth and reinvestment rates. 4. It sums the present value

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    Kohler DCF

    Uploaded by

    Jennifer Langton
    6K views1 page
    This document contains calculations related to valuing a company using a discounted cash flow approach. It includes calculations of net operating profit after tax, free cash flow, terminal value, weighted average cost of capital, total valuation, and adjustments for lack of control and liquidity. Specifically: 1. It calculates free cash flow for the years 1998-2002 by taking net operating profit after tax plus depreciation and subtracting capital expenditures and changes in working capital. 2. It discounts these cash flows using the weighted average cost of capital to calculate their present value. 3. It calculates a terminal value based on the company's expected perpetual growth and reinvestment rates. 4. It sums the present value

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    This document contains calculations related to valuing a company using a discounted cash flow approach. It includes calculations of net operating profit after tax, free cash flow, terminal value, weighted average cost of capital, total valuation, and adjustments for lack of control and liquidity. Specifically: 1. It calculates free cash flow for the years 1998-2002 by taking net operating profit after tax plus depreciation and subtracting capital expenditures and changes in working capital. 2. It discounts these cash flows using the weighted average cost of capital to calculate their present value. 3. It calculates a terminal value based on the company's expected perpetual growth and reinvestment rates. 4. It sums the present value

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    6K views1 page

    Kohler DCF

    Uploaded by

    Jennifer Langton
    This document contains calculations related to valuing a company using a discounted cash flow approach. It includes calculations of net operating profit after tax, free cash flow, terminal value, weighted average cost of capital, total valuation, and adjustments for lack of control and liquidity. Specifically: 1. It calculates free cash flow for the years 1998-2002 by taking net operating profit after tax plus depreciation and subtracting capital expenditures and changes in working capital. 2. It discounts these cash flows using the weighted average cost of capital to calculate their present value. 3. It calculates a terminal value based on the company's expected perpetual growth and reinvestment rates. 4. It sums the present value

    Copyright:

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    of 1

    Annex I: Discounted Cash Flow and WACC calculation

    DCF Valuation Approach


    1 Operating Income after Depreciation
    2
    Less: Tax
    3 NOPAT

    1998a
    102,688
    (45,451)
    57,237

    Tax Rate
    1999
    126,032
    (54,724)
    71,308

    2000
    171,619
    (74,518)
    97,101

    2001
    187,978
    (81,621)
    106,357

    2002
    201,604
    (87,537)
    114,067

    4 Depreciation and Amortization


    5 Purchase of Property, Plant and Equipment
    6 Net Change in Working Capital

    56,113
    (87,691)
    (1,435)

    87,661
    (97,205)
    (5,762)

    91,786
    (96,971)
    (27,705)

    94,593
    (96,811)
    (17,702)

    97,355
    (106,647)
    (23,145)

    7 Free Cash Flow (Firm)


    8 PV of Free Cash Flow
    9 Terminal Value

    24,224
    23,449
    809,161

    56,002
    48,491

    64,211
    50,510

    86,437
    61,770

    81,630
    52,995

    10
    11
    12
    13
    14

    15
    16
    17
    18

    Total Valuation (DCF)


    Total Debt
    Equity Valuation
    Total Shares
    Per Share Value (Thousands)

    1,046,376
    232,444
    813,932
    7,587.89
    107.27

    DCF Valuation Approach - Includes Liquidity & Minority Discount


    1998a
    Liquidity Discount
    22.50%
    Per Share Value (Thousands)
    83.13
    Minority Discount
    39.50%
    Per Share Value (Thousands) - Adjusted
    50.29

    Exhibit 6b - Calculation
    1998a
    1999
    44.26%
    43.42%

    Growing Perpetuity - Continuing Value


    TV Assumption
    90,922
    Reinvestment Rate
    3.00%
    Rate (WACC)
    10.08%
    Growth Rate
    3.00%
    Continuing Value *
    $ 1,246,385

    2000
    43.42%

    2001
    43.42%

    2002
    43.42%

    WACC Calculation
    T:
    43.4%
    Rd:
    6.60%
    MRP:
    5.00%
    rf:
    5.64%
    B:
    1.03
    Re:
    10.78%

    Assumption
    Assumption
    Calculation
    Assumption

    * CVH = E(NOPATH+1) * (1 - b) / r - g

    E/V:
    D/V:

    90.00%
    10.00%

    WACC **

    10.08%

    given
    given
    given
    Exhibit 8
    Calculated
    Calculated

    ** WACC = (E/V) x Re + (D/V) x (Rd x (1 - T))

    1999

    2000

    2001

    2002

    COMPS - BA => BE Calculation


    American
    Standard
    Total Debt
    2,404.0
    MV of Equity
    3,502.2
    Debt + Equity
    5,906.2
    DV
    EV

    American
    Woodmark
    13.4
    236.3
    249.7

    40.70%
    59.30%

    Masco
    1,187.9
    9,838.8
    11,026.7
    10.77%
    89.23%

    Briggs &
    Stratton
    259.6
    1,109.3
    1,368.9
    18.96%
    81.04%

    Cummins
    Engine
    1,250.0
    2,285.9
    3,535.9
    35.35%
    64.65%

    Detroit
    Diesel
    107.4
    568.1
    675.5
    15.90%
    84.10%

    Average
    870.4
    2,923.4

    24.34%
    75.66%

    NOTES:
    1

    Exhibit 6b

    Operating Income after Depreciation x (1-T)

    Operating Income after Depreciation - Tax

    Exhibit 6c

    Exhibit 6c: Purchase/Sale of PP&E (Net Capex)

    Exhibit 6c: SUM of Increase/Decrease: AR, Inventory, Future Income Tax Benefits, Prepaid Expenses and other Assets, AP& Accrued Expenses

    NOPAT + Operating Income after Depreciation - Net Capex - Net Change in Working Capital

    1998: FCF / ((1 + WACC x 8/12)^0.5) 1999: FCF / ((1 + WACC)^1.5) 2000: FCF / ((1 + WACC)^2.5) 2001: FCF / ((1 + WACC)^3.5) 2002: FCF / ((1 + WACC)^4.5)

    Continuing Value / ((1 + WACC)^4.5)

    10

    Continuing Value + SUM PV of FCF

    11

    Exhibit 3a: 1998 Current Maturities LTD + LTD

    12

    Total Valuation (DCF) - Total Debt

    13

    Exhibit 5: Total Shares Outstanding

    14

    Equity Valuation / Total Shares

    15

    Note on Valuring Control and Liquidity in Family and Closely Held Firms: Range 20-25% (Value Stated is an Average)

    16

    Unadjusted Per Share Value x (1 - Liquidity Discount)

    17

    Note on Valuring Control and Liquidity in Family and Closely Held Firms: Range 36-49% (Value Stated is an Average)

    18

    Liquidity Discount Per Share Value x (1 - Minority Discount)

    B over last 36 months


    Unlevered B (Asset)
    Relevered BE

    0.82
    0.49
    1.03

    0.76
    0.72

    1.28
    1.14

    0.66
    0.53

    1.09
    0.70

    1.30
    1.09

    0.79

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