Firm X is considering performing a considerable investment in year 2017. Use the following Pro-Forma Financial Statements
Question:
Firm X is considering performing a considerable investment in year 2017. Use the following Pro-Forma Financial Statements for 2017-2021 to forecast the future Free Cash Flow and estimated the value of firm X from performing these investments.
Income Statement: | 2017 | 2018 | 2019 | 2020 | 2021 |
Sales | $20,821,500 | $27,369,563 | $34,537,742 | $42,372,548 | $50,923,634 |
Costs except Depr. | -$11,287,076 | -$14,836,699 | -$18,722,480 | -$22,969,630 | -$27,605,068 |
EBITDA | $9,534,424 | $12,532,864 | $15,815,262 | $19,402,918 | $23,318,567 |
Depreciation | -$124,480 | -$122,522 | -$120,720 | -$119,062 | -$117,537 |
EBIT | $9,409,944 | $12,410,342 | $15,694,542 | $19,283,855 | $23,201,029 |
Interest Expense (net) | -$45,000 | -$135,000 | -$135,000 | -$135,000 | -$135,000 |
Pretax Income | $9,364,944 | $12,275,342 | $15,559,542 | $19,148,855 | $23,066,029 |
Income Tax | -$3,277,730 | -$4,296,370 | -$5,445,840 | -$6,702,099 | -$8,073,110 |
Net Income | $6,087,214 | $7,978,972 | $10,113,703 | $12,446,756 | $14,992,919 |
Working Capital | 2017 | 2018 | 2019 | 2020 | 2021 |
Total Current Assets | $26,319,049 | $34,596,012 | $43,656,822 | $53,560,270 | $64,369,120 |
Total Current Liabilities | $16,800,216 | $22,083,643 | $27,867,422 | $34,189,082 | $41,088,686 |
Net Working Capital | $9,518,833 | $12,512,369 | $15,789,400 | $19,371,188 | $23,280,434 |
Increase in Net Working Capital | $2,729,953 | $2,993,536 | $3,277,031 | $3,581,788 | $3,909,246 |
Fixed Assets & Capit Investm | 2017 | 2018 | 2019 | 2020 | 2021 |
Opening Book Value | $506,000 | $1,431,520 | $1,408,998 | $1,388,279 | $1,369,216 |
Capital Investment | $1,050,000 | $100,000 | $100,000 | $100,000 | $100,000 |
Depreciation | -$124,480 | -$122,522 | -$120,720 | -$119,062 | -$117,537 |
Closing Book Value | $1,431,520 | $1,408,998 | $1,388,279 | $1,369,216 | $1,351,679 |
1) What is the forecast value for Free Cash Flows of Firm X on 2017?
Expert Answer:
New Venture Creation Entrepreneurship for the 21st Century
ISBN: 978-0078029103
9th edition
Authors: Stephen Spinelli, Rob Adams
