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    Paramount Valuation - 1993: Cash Flow Forecast

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    aishwaryap
    The document presents a valuation of Paramount from 1993 which includes financial forecasts through 1998, a calculation of weighted average cost of capital (WACC) of 10.31%, and estimates of Paramount's value using multiples of EBITDA from comparable companies ranging from $6.3 billion to $7.9 billion, implying a per share price of $52.26 to $65.46. It also provides financial statements and ratios for Paramount in 1993 to assess its performance and financial position.

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    Paramount Valuation - 1993: Cash Flow Forecast

    Uploaded by

    aishwaryap
    97 views9 pages
    The document presents a valuation of Paramount from 1993 which includes financial forecasts through 1998, a calculation of weighted average cost of capital (WACC) of 10.31%, and estimates of Paramount's value using multiples of EBITDA from comparable companies ranging from $6.3 billion to $7.9 billion, implying a per share price of $52.26 to $65.46. It also provides financial statements and ratios for Paramount in 1993 to assess its performance and financial position.

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    The document presents a valuation of Paramount from 1993 which includes financial forecasts through 1998, a calculation of weighted average cost of capital (WACC) of 10.31%, and estimates of Paramount's value using multiples of EBITDA from comparable companies ranging from $6.3 billion to $7.9 billion, implying a per share price of $52.26 to $65.46. It also provides financial statements and ratios for Paramount in 1993 to assess its performance and financial position.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    97 views9 pages

    Paramount Valuation - 1993: Cash Flow Forecast

    Uploaded by

    aishwaryap
    The document presents a valuation of Paramount from 1993 which includes financial forecasts through 1998, a calculation of weighted average cost of capital (WACC) of 10.31%, and estimates of Paramount's value using multiples of EBITDA from comparable companies ranging from $6.3 billion to $7.9 billion, implying a per share price of $52.26 to $65.46. It also provides financial statements and ratios for Paramount in 1993 to assess its performance and financial position.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 9

    Paramount valuation -1993

    Cash flow forecast


    year
    0
    year
    1993
    Sales
    EBITD
    Depreciation
    EBIT
    Tax
    34%
    EBIT(1-t)
    Operating Cash Flow (EBITD-Tax)
    Capital expenditures
    Change WC
    Asset sale
    Net Cash Flow
    Discount rate (1+WACC)^t
    PV (1-5)
    $ 1,973.63

    1
    1994
    $ 4,905.00
    $ 660.60
    $ (162.00)
    $ 498.60
    $ (169.52)
    $ 329.08
    $ 491.08
    $ (160.10)
    $ (45.60)

    2
    1995
    $ 5,264.30
    $ 737.00
    $ (172.00)
    $ 565.00
    $ (192.10)
    $ 372.90
    $ 544.90
    $ (177.30)
    $ (62.10)
    $ 900.00
    285.38 $ 1,205.50
    258.70 $ 990.66

    3
    1996
    $ 5,648.60
    $ 790.80
    $ (184.00)
    $ 606.80
    $ (206.31)
    $ 400.49
    $ 584.49
    $ (176.70)
    $ (66.50)

    $
    $

    $
    $

    341.29 $
    254.25 $

    Terminal value
    g2
    CF6
    TV year5
    TV 0
    Enterprise Value
    Equity

    4
    1997
    $ 6,060.00
    $ 848.40
    $ (196.00)
    $ 652.40
    $ (221.82)
    $ 430.58
    $ 626.58
    $ (202.90)
    $ (71.20)

    5%
    $ 397.87
    $ 7,490.76
    $ 4,585.87
    $ 1,973.63 $ 4,585.87 $ 1,007.10 $ 7,566.61
    $ 6,553.61

    5
    1998
    $ 6,500.70
    $ 910.10
    $ (209.00)
    $ 701.10
    $ (238.37)
    $ 462.73
    $ 671.73
    $ (216.60)
    $ (76.20)

    352.48 $
    238.04 $

    378.93
    231.98

    P0

    54.61

    WACC Calculation
    S
    B
    S/B+S

    120

    Rf
    Rs
    Rb
    t
    Rb*(1-t)
    WACC

    Historical tax rate

    Beta
    5.68%
    11.18%
    7.05%
    34.00%
    4.65%
    10.31%
    1990
    32%

    Hard synergy calculation


    Estimated synergies: Paramount -Viacom merger
    Discount rate (1+WACC)^t
    $
    PV (1-5)
    $ 654.52

    Terminal value of synergies

    55 $ 6,600.00
    $ 1,013.00
    0.867
    Rm-Rf
    1
    5.50%

    1991
    37%

    1992
    31%

    1
    1994
    134
    121.47 $

    2
    1995
    150
    123.27 $

    1993 Average
    34%
    34%

    3
    1996
    171
    127.39 $

    4
    1997
    216
    145.87 $

    5
    1998
    223
    136.52

    g2
    Synergies year 6
    TV of synergies year5
    PV of TV of synergies
    PV of all synergies

    5%
    $ 234.15
    $ 4,408.35
    $ 2,698.81
    $ 654.52 $ 2,698.81

    $ 3,353.34

    Synergies per share


    Current share price

    $
    $

    27.94
    54.61

    Total value of paramount shares to Viacom

    82.56

    Paramount valuation -1993


    EBITD multiple

    EBITD Multiple
    Wald Disney
    Time Warner
    Turner Broadcasting

    1993 Est 1994


    13.3
    12.2
    11.2
    10.4
    14.8
    11.9

    Median
    Average
    Time Warner

    13.3
    13.1
    11.2

    11.9
    11.5
    10.4

    Parmount EBITD
    Estimated capital (medians)
    Estimated capital (Average)
    Time Warner multiple

    $ 560.50
    $ 7,454.65
    $ 7,342.55
    $ 6,277.60

    $ 660.60
    $ 7,861.14
    $ 7,596.90
    $ 6,870.24

    Estimated equity (medians)


    Estimated equity (Average)
    Estimated equity (TW)

    $ 7,448.75 $ 7,855.24
    $ 7,336.65 $ 7,591.00
    $ 6,271.70 $ 6,864.34

    Estimated stock price (medians) $


    Estimated stock price (averages) $
    Estimated stock price (TW)
    $

    62.07 $
    61.14 $
    52.26 $

    65.46
    63.26
    57.20

    Paramount 1993
    Income statement
    Revenues
    Cost of Goods Sold
    SG & A
    Operating Income
    Other Income (expense)
    Interest Expense
    Interest Income
    Earnings before Taxes
    Provision for Taxes
    Extraordinary Items
    Net Earnings
    Depreciation and Amortization
    Working Capital
    Capital Expenditures

    1993
    4,641.60
    -3,047.60
    -1,254.60

    339.4
    (6.6)
    (94.0)
    78.5
    317.3

    (109.2)
    (9.1)
    199.0

    221.1
    802.7
    111.8

    Balance sheet

    1993
    1993

    ASSETS
    Cash
    Short-term investments
    Trade receivables
    Inventories
    Other current assets
    Total Current Assets
    Property, Plant, & Equipment
    Accumulated Depreciation
    Net PP&E
    Intangibles
    Other Assets
    Total Assets

    Price per share


    Shares outstanding

    380.6
    626.50
    1,062.20
    633.7

    1993

    LIABILITIES
    Current Maturities of LT debt
    10.1
    Trade Accounts Payable
    196.5
    Income taxes Payable
    64.5
    Accrued Expenses and other 1,170.50

    538.3

    3,241.30
    1,572.20
    -382.4
    1,189.80
    1,560.30
    1,454.1

    7,455.5

    54
    120

    Total Current Liabilities


    Deferred Liabilities
    Long-Term debt

    1,441.60
    871.2
    1,002.9

    Total Liabilities

    3,315.7

    EQUITY
    Common Stock
    Paid-In Capital
    Retained Earnings
    Translation Adjustments

    119.6
    778.1
    3,252.2

    Total Net Worth

    4,129.8

    Total Liabilities and Equity

    7,445.5

    (20.1)

    Short term solvancy


    Current ratio

    2.248

    Quick ratio

    1.435

    Finacial leverage
    Debt/Assets

    0.136

    Debt/book equity

    0.245

    Debt/Market equity

    0.156

    Interest coverage (gross)

    3.611

    Interest coverage (net)

    21.897

    Profitability
    Gross operating margins

    0.073

    Return on assets, ROA

    0.046

    Return on equity, ROE

    0.048

    Activity
    Asset turnover

    0.623

    Receivables turnover

    4.370

    82 day credit

    Inventory turnover

    7.325

    49 days

    Market value
    EPS
    Price to earnings P/E
    Market to book

    1.658
    32.563
    1.569

    Bankruptcy prediction
    X1
    X2
    X3
    X4
    X5
    Z score

    Ratio
    Coeficient product
    0.241
    1.2
    0.290
    0.437
    1.4
    0.612
    0.046
    3.3
    0.150
    6.397
    0.6
    3.838
    0.623
    1
    0.623
    5.512

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