Target Corporation: Create Eval financial forecast excel and Word document , please follow these example file

Explain why the principal values of calculating financial ratios are to make comparisons over time and to develop comparisons with other companies.

Additional outcomes include the ability to explain the use of common-size financial statements, how to prepare an integrated ratio analysis, and to acquire an understanding of the principal challenges of ratio analysis.

Becoming familiar with and learning how to calculate and use value-based or economic value-added measures of performance (EVA, MVA, CFROI, SVA, CVA, and REVA) are important outcomes this week. These measures are often used in addition to the traditional financial and operational ratios that are used to examine company performance.

Another important objective is to understand the 4 C?s of credit analysis or factors to consider in corporate credit analysis. It is useful to understand how creditors use these indicators in the process of making credit decisions.

1. Prepare a written analysis of the financial ratios resulting from the Week 2 eVal Financial Forecast of the selected company. This must include trend analysis (historical and projected) and comparative analysis (cross-sectional or industry). The analysis needs to examine strengths and weaknesses revealed by the data. Remember, in a written ratio analysis the actual ratio data need to be included in the written analysis in addition to presentation in any accompanying tables or figures (graphs).

1. What are the most important things that you learned from the study of this week?s readings and assignments? Remember to always include appropriate references.

SAMPLE RATIO DISCUSSION ANALYSIS 1. Prepare a written analysis of the financial ratios resulting from the Week 2 eVal Financial Forecast of the selected company. This must include trend analysis (historical and projected) and comparative analysis (cross-sectional or industry). The analysis needs to examine strengths and weaknesses revealed by the data. Remember, in a written ratio analysis the actual ratio data need to be included in the written analysis in addition to presentation in any accompanying tables or figures (graphs). Following is an analysis of the financial ratios in Week 2's eVal Financial Forecast for Microsoft Corporation. Trend Analysis Five-year timelines will be used for historical and forecasted data for comparison purposes (red highlighted items reflect areas of interest): Annual Growth Rates Analysis Historical (2011 - 2015). Sales grew 5.4%, 5.6%, 11.5%, and 7.8% during the historical period at an average yearly rate of 7.6% and an actual growth rate of 33.79% over the period. Assets grew 11.6%, 17.4%, 21.0%, and 2.2% at an average yearly rate of 13.05% and an actual growth rate over the period of 62.11%. Common equity decreased from 16.3% to -10.8% over the period (-166.26%) due to negative growth rate in 2015 contributable to a reduction in retained earnings. Earnings, however, was sporadic contributable to a large non-operating loss every third year. Earnings dropped -26.7% in 2012, increased 28.8% in 2013, increased 1% in 2014, but decreased again -44.8% in 2015 for an actual decrease of -47.33% over the period. Microsoft's sustainable growth rate is lowest in the years of the large nonoperating loss and reflects 19.5%, 15.2%, and 2.5% in the last three-years. Forecasted (2016 - 2020). Sales are projected to decline in 2016 by -6.9% attributed to Microsoft's transition period, and then continue to grow at a declining rate from 9.3% to 7.2%. Over the period sales are projected to increase 37.30%, which is comparable to the historical timeframe. Assets are predicted to grow 36.32% (a lot slower than the 62.11% historical data); caused by a forecasted negative gain in 2016. Common equity is expected to increase from -3.1% to 6.8% over the period (+319.35%) due to several positive growth rates across the period (a reverse of the historical data). Projected earnings will continue to be sporadic, contributable to the pattern of large non-operating loss every third year. Forecasted earnings are anticipated to increase 67.2% in 2016, increase 12.0% in 2017, decrease -31.3% in 2018, increase 66.7% in 2019 and increase 9.2% in 2020 for a projected growth rate of 40% over the period (a reverse of the historical data). Microsoft's sustainable growth rate is also lowest in years of a projected continued pattern of large non-operating loss, but expected to average at 10.98% across the forecasted years. Forecasted (2021 - 2027). Sales are expected to grow at a steady declining rate through the rest of the eVAL forecast from 6.5% until the terminal rate of 3%. Similarly, assets and common equity are also projected to grow from 6.3% to 3% and 6.1% to 3% respectively. Conversely, earnings and sustainable growth rate are forecasted to follow the same pattern as the historical data and earlier forecast. Profitability and Margin Analysis Historical (2011 - 2015). The company's return on equity for 2012 - 2014 averaged .279, decreasing by -47.64% to .144 in 2015 with the $9,650 million non-operating loss. Similarly, return on assets averaged .227, decreasing by -52.02% to .107 in 2015 for the same reason. Microsoft's gross margin decreased -13.39% (.814 to .705) over the five-year period, as did the EBIT margin (-22.42%) (.388 to . 301) and net operating margin (-59.88%) (.324 to .130). The large drop in net operating margin attributable again to the non-operating loss. Forecasted (2016 - 2020). The company's return on equity is expected to increase 8.49% over the period (.259 to .281), with a decrease from .282 to .178 in 2018 consistent with a projected non-operating loss. Similarly, return on assets is forecasted to increase 8.89% over the period (.180 to .196), but decrease from .197 to .124 in 2018 for the same reason. Microsoft's gross margin is expected to steadily decline -1.76% over the five-year period (.738 to .725), while EBIT margin is anticipated to remain around .308 with no change and net operating margin sporadically increase 2.14% (.234 to .239) with a drop to .152 in 2018 attributable to the patterned non-operating loss. Forecasted (2021 - 2027). Return on equity and return on assets is projected to continue the same pattern as the historical data and earlier forecast. Gross margin and EBIT margin are expected to continue steadily decreasing (.721 to .705 and .307 to .305 respectively), while net operating margin should maintain the same sporadic pattern. Turnover Analysis Historical (2011 - 2015). The company's net operating asset turnover dropped -17.02% from .987 to .819. Similarly, the net working capital turnover decreased -15.88% from 1.448 to 1.218. The average days receivables dropped slightly by -4.10% during the period (from 76.16 to 73.04 days), while the average days inventory increased 18.48% (from 31 to 36.7 days) and the average days payables dropped -12.66% (from 105.10 to 91.79 days). The aggregate of these average day measures caused the cash conversion cycle (CCC) to increase 774.17% from 2.06 days to 17.97 days over the period. Forecasted (2016 - 2020). The company's projected net operating asset turnover is anticipated to increase 6.63% (from .769 to .820). While, the net working capital turnover is forecasted to change from 1.092 to 1.171 (+7.23%). The forecasted average days receivables is expected to drop -6.81% during the period (from 72.44 to 67.50 days), while the average days inventory and average days payables is anticipated to drop -13.08% (from 42.37 to 36.82 days) and -15.70% (from 98.40 to 82.95 days) respectively. The individual average day projections are expected to cause an increase in the cash conversion cycle by 30.31% (from 16.41 to 21.38 days). Forecasted (2021 - 2027). Net operating asset turnover is projected to increase from .821 to .822, while net working capital turnover is expected to decline from 1.168 to 1.152. Microsoft's CCC is forecasted to increase as average days receivables increase from 67.72 to 68.83, average days inventory increases from 36.94 to 37.77, and average days payables increases from 83.27 to 85.51 days. Leverage Analysis Historical (2011 - 2015). In lieu of repatriating overseas funds at a higher tax rate, Microsoft has begun to increase its leverage to fund corporate initiatives. The company's debt to equity ratio over the historical period increased 92.17% (.230 to .442), while its CFO to total debt ratio decreased -63.39% (1.844 to . 675) due to increased leverage and the large non-operating loss in 2015. Subsequent to debt is a company's ability to service that debt. Microsoft's current ratio decreased slightly over the period by -3.96% (2.604 to 2.501). The company's quick ratio also decreased minimally by -.52% (2.306 to 2.294). The reductions were not enough to significantly affect payments. The EBIT interest coverage increased to 1878.13 in 2015 after four years of negative amounts caused by a positive net income expense. Forecasted (2016 - 2020). Microsoft is on track to continue to use leverage to fund corporate initiatives. The company's debt to equity ratio is forecasted to increase slightly by .92% (.432 to .436), while its CFO to total debt ratio can expect to increase 29.43% (from .666 to .862). The forecast for Microsoft's ability to service its debt is promising. The company's current ratio is projected to decrease slightly over the period by -.39% (2.526 to 2.516). Likewise, the quick ratio is also projected for a slight decrease of -.47% (2.322 to 2.311). The EBIT interest coverage is anticipated to increase 6.96% (from 1517.46 to 1623.09). Forecasted (2021 - 2027). Microsoft is expected to continue its leverage in lieu of repatriating funds. Debt to equity is projected to increase from .437 to .442 and CFO to total debt from .616 to .807. The company is forecasted to maintain high current and quick ratios, declining from 2.513 to 2.501 and 2.308 to 2.294 respectively. The EBIT interest coverage is also projected to decline from 1618.26 to 1596.41. Comparative Analysis (CSI Market, n.d.). The chart below reflects Microsoft compared to the Software and Programming Industry: Microsoft falls well below standards in its sales (8.41% to Industry's 13.37%), earnings (-8.26% to .64%), and free cash flow (.92% to 7.02%) growth rates. The negative 5-year average earnings are attributable to a one-time non-operating loss every third year. Conversely, the company is above industry standards with return on equity (26.73% to 21.59%) and return on assets (14.07% to 11.62%). Microsoft falls slightly below standards in gross margin comparisons (72.32% to 74.38%), but through good expense management beats the industry in operating (30.82% to 25.12%) and net margin (24.53% to 19.05%) comparisons. The company's asset turnover beats the industry (.52 to .51), but falls short in its receivable turnover (6.26 to 7.95) and inventory turnover (11.38 to 16.57). While Microsoft's debt to equity ratio is higher than the industry (.39 to .17) because of increasing debt in lieu of repatriating overseas funds, its debt coverage falls substantially short (.72 to 1.55). And finally, the company does well at beating the industry with short-term liquidity. Its current and quick ratio both beat the industry (2.57 to 2.43 and 2.04 to 1.48 respectively). Strengths and Weaknesses Annual Growth Rates Analysis Microsoft's sporadic earnings are a weakness to its operations. Microsoft's financials have been clouded by several one-time charges over the years, resulting in very inconsistent and confusing results; making it hard to forecast trends. Harry (2016) comments that the firm has taken so many one-time charges (due to bad acquisitions) that it seems that it is part of the normal operations. Microsoft shows strengths, however, in its sustainable growth rate averaging 12.4% in actual years and 10.98% in earlier forecasted years. This means at a projected sustainable rate of 10.98% the company can grow at that rate without any additional financing. If the firm wishes to grow faster than this number, they will need to incur additional financing. Profitability and Margin Analysis Microsoft is doing well on its return on equity and return on operating assets (except in years of one-time charges). The company beats the industry standard on both accounts. Despite its dropping margins over the actual and forecasted periods, Microsoft still maintains a good gross, EBIT, and net operating margin. The firm beats the industry's EBIT and net operating margin standards, and falls slightly below the gross margin standard. This shows Microsoft's strength in expense management, to beat the industry's EBIT and net operating margins, after being below standard in gross margin. Microsoft needs to eliminate the one-time charge every three years to maintain stable margins across the horizon. Turnover Analysis Microsoft's asset turnover is almost the same as the industry's - meaning it does well at utilizing its assets to generate sales. The company shows strength in its working capital turnover reflecting a high level of working capital to support the generation of sales across historical and forecasted data. Microsoft's cash collection cycle averages 18.8 days actual and 20.4 days in the early forecast, which is a great strength, indicating how fast the company can convert the purchase of inventory to cash from its customers. The company shows efficiency in reducing its days collectible, going from 76.16 days in 2012 to a projected 67.50 days in 2020. Conversely, the firm has increased the days inventory from 31 to 36.8 days and decreased the days payable from 105.10 to 82.95 over the same period, causing a slight increase to the CCC in the forecasted years. Despite the slight increase, the company's CCC is still a strong strength. The lower a company's CCC the better its liquidity and the quicker it can pay its debts. Leverage Analysis Microsoft's debt to equity ratio is at a reasonable level, considering its usage of debt to fund operations. However, the declining CFO to total debt ratio over the historical and forecasted period has dropped to below 1.0 and is a weakness that needs addressing. The low long-term CFO ratio does not impede Microsoft's short-term liquidity where debt payment is the most concern. The company's current and quick ratios are great strengths providing excellent liquidity to the firm. The current ratio averages 2.5 actual and forecasted, while the quick ratio averages 2.3 actual and forecasted. Both are above industry standards. Additionally, the company shows strength in its EBIT Interest Coverage - 1878.13 in 2015 and the forecasted period averages 1607.69. This indicates how many times the EBIT will cover the debt service. Conclusion The continuous innovation and fast pace of the technology sector and software industry will continue to keep companies fighting for that competitive advantage. Microsoft in particular will continue to find its way as the company transitions its focus to the cloud and integrates its core products into that platform. Overall the forecasted ratios show similar patterns to the historical data. Of major concern is that the analysis points to Microsoft continuing to fluctuate in its earnings if the company doesn't figure out a way to eliminate the \"one-time\" charges every third year. This will continue to hamper margins, cloud its financial statements, and may keep investors away. 2. What are the most important things that you learned from the study of this week's readings and assignments? Remember to always include appropriate references. References: CSI Market. (n.d.). Microsoft corporation. Retrieved June 22, 2016, from http://csimarket.com/stocks/fundamentals_glance.php?code=MSFT Harry, J. (2016, June 21). Microsoft's margins seem to be in free fall - Not a good sign. Retrieved from http://seekingalpha.com/article/3983368-margins-crack-microsofts-armor? app=1&auth_param=1dases:1bmipng:ced0abc11afff6334529843d07167c3e&dr=1 - alt3 Stewart, B. (Spring 2009). EVA momentum: The one ratio that tells the whole story. Journal of Applied Corporate Finance, (21)2. Retrieved from http://eds.a.ebscohost.com. ezproxy.umuc.edu/eds/pdfviewer/pdfviewer?vid=1&sid=ed2c3577-3a7a-4918-87b9e05eac6e15b5%40sessionmgr4003&hid=4113 version 4.00 Russell Lundholm Richard Sloan 2012, Russell Lundholm and Richard Sloan. STEPS: 1) enter financial data on the Financial Statements Sheet, 2) examine the Ratio Analysis and Cash Flow Analysis, 3) enter forecasts on the Forecasting Assumptions Sheet to create future Financial Statement predictions, 4) enter cost of capital assumptions on the Valuation Parameters Sheet to determine the company's value, 5) evaluate the details of the resulting valuation for either the Residual Income of Discounted Cash Flow models. Other Useful Links: Where to buy the latest 'Equity Valuation and Analysis' textbook Check here for updated versions of eVal Supplements to the textbook cases version 4.00 tement predictions, e company's value, unted Cash Flow models. Financial Statements ($000s) Company Name and Ticker Common Shares Outstanding Estimated Price/Share=$66.29 Netflix Fiscal Year End (YYYY-MM-DD) Data can be entered manually in financial statements or as a block cut-andpaste from the Case Data Sheet to the Raw Data Input section below. Jump to Raw Data Input KSS Link to Form 10-Ks 307,000 (in 000s at most recent fiscal year end) Actual 2006/01/31 Actual 2007/01/31 Actual 2008/01/31 Actual 2009/01/31 Actual 2010/01/31 Forecast 2011/01/31 Forecast 2012/01/31 Forecast 2013/01/31 Forecast 2014/01/31 Forecast 2015/01/31 Forecast 2016/01/31 Forecast 2017/01/31 Forecast 2018/01/31 Forecast 2019/01/31 Forecast 2020/01/31 Forecast 2021/01/31 Forecast 2022/01/31 Income Statement Sales (Net) Cost of Goods Sold Gross Profit R&D Expense SG&A Expense EBITDA Depreciation & Amortization EBIT Net Interest Expense Non-Operating Income (Loss) EBT Income Taxes Other Income (Loss) Net Income Before Ext. Items Ext. Items & Disc. Ops. Minority Interest in Earnings Preferred Dividends Net Income (available to common) 13,402,217 (8,670,484) 4,731,733 0 (3,007,842) 1,723,891 (307,710) 1,416,181 (79,383) 8,992 1,345,790 (503,830) 0 841,960 0 0 0 841,960 15,544,184 (9,890,513) 5,653,671 0 (3,451,196) 2,202,475 (387,674) 1,814,801 (74,427) 34,071 1,774,445 (665,764) 0 1,108,681 0 0 0 1,108,681 16,473,734 (10,459,549) 6,014,185 0 (3,757,563) 2,256,622 (452,145) 1,804,477 (98,712) 36,296 1,742,061 (658,210) 0 1,083,851 0 0 0 1,083,851 16,389,000 (10,334,000) 6,055,000 0 (3,978,000) 2,077,000 (541,000) 1,536,000 (140,000) 29,000 1,425,000 (540,000) 0 885,000 0 0 0 885,000 17,178,000 (10,680,000) 6,498,000 0 (4,196,000) 2,302,000 (590,000) 1,712,000 (134,000) 10,000 1,588,000 (597,000) 0 991,000 0 0 0 991,000 17,976,653 (11,176,543) 6,800,110 0 (4,391,084) 2,409,026 (604,888) 1,804,138 (137,049) 10,465 1,677,555 (630,668) 0 1,046,887 0 0 0 1,046,887 18,782,789 (11,677,738) 7,105,051 0 (4,587,995) 2,517,056 (632,501) 1,884,555 (143,305) 10,934 1,752,184 (658,724) 0 1,093,460 0 0 0 1,093,460 19,594,097 (12,182,149) 7,411,948 0 (4,786,170) 2,625,778 (660,331) 1,965,447 (149,610) 11,407 1,827,243 (686,942) 0 1,140,301 0 0 0 1,140,301 20,408,132 (12,688,255) 7,719,877 0 (4,985,011) 2,734,866 (688,298) 2,046,568 (155,947) 11,880 1,902,501 (715,235) 0 1,187,266 0 0 0 1,187,266 21,222,328 (13,194,462) 8,027,866 0 (5,183,892) 2,843,975 (716,314) 2,127,661 (162,294) 12,354 1,977,721 (743,513) 0 1,234,207 0 0 0 1,234,207 22,034,005 (13,699,102) 8,334,903 0 (5,382,157) 2,952,747 (744,289) 2,208,457 (168,633) 12,827 2,052,651 (771,683) 0 1,280,968 0 0 0 1,280,968 22,840,386 (14,200,450) 8,639,937 0 (5,579,128) 3,060,809 (772,130) 2,288,678 (174,941) 13,296 2,127,034 (799,647) 0 1,327,387 0 0 0 1,327,387 23,638,608 (14,696,725) 8,941,884 0 (5,774,106) 3,167,777 (799,740) 2,368,037 (181,196) 13,761 2,200,602 (827,304) 0 1,373,298 0 0 0 1,373,298 24,425,740 (15,186,104) 9,239,635 0 (5,966,376) 3,273,260 (827,018) 2,446,241 (187,377) 14,219 2,273,084 (854,554) 0 1,418,530 0 0 0 1,418,530 25,198,797 (15,666,733) 9,532,063 0 (6,155,207) 3,376,856 (853,864) 2,522,992 (193,459) 14,669 2,344,202 (881,290) 0 1,462,912 0 0 0 1,462,912 25,954,760 (16,136,735) 9,818,025 0 (6,339,863) 3,478,162 (880,173) 2,597,989 (199,420) 15,109 2,413,678 (907,409) 0 1,506,269 0 0 0 1,506,269 26,733,403 (16,620,838) 10,112,566 0 (6,530,059) 3,582,506 (906,578) 2,675,928 (205,402) 15,563 2,486,089 (934,632) 0 1,551,457 0 0 0 1,551,457 Operating Cash and Market. Sec. Receivables Inventories Other Current Assets Total Current Assets PP&E (Net) Investments Intangibles Other Assets Total Assets 286,916 1,652,065 2,237,568 89,503 4,266,052 4,543,832 0 221,718 121,436 9,153,038 620,400 0 2,588,099 192,541 3,401,040 5,352,974 0 228,624 58,539 9,041,177 663,671 0 2,855,733 204,485 3,723,889 6,509,819 0 219,296 107,078 10,560,082 676,000 0 2,799,000 225,000 3,700,000 6,984,000 332,000 210,000 108,000 11,334,000 2,267,000 0 2,923,000 295,000 5,485,000 7,018,000 321,000 204,000 132,000 13,160,000 2,372,399 0 3,058,898 308,715 5,740,013 7,344,286 335,924 213,485 138,137 13,771,845 2,478,786 0 3,196,070 322,559 5,997,415 7,673,630 350,988 223,058 144,332 14,389,422 2,585,855 0 3,334,122 336,492 6,256,469 8,005,086 366,149 232,693 150,566 15,010,962 2,693,284 0 3,472,638 350,471 6,516,393 8,337,657 381,360 242,360 156,821 15,634,592 2,800,735 0 3,611,181 364,454 6,776,369 8,670,293 396,575 252,029 163,078 16,258,344 2,907,852 0 3,749,295 378,393 7,035,541 9,001,901 411,743 261,668 169,315 16,880,167 3,014,271 0 3,886,509 392,241 7,293,021 9,331,344 426,811 271,245 175,511 17,497,932 3,119,614 0 4,022,334 405,949 7,547,896 9,657,454 441,727 280,724 181,645 18,109,447 3,223,492 0 4,156,272 419,466 7,799,231 9,979,034 456,436 290,072 187,693 18,712,466 3,325,514 0 4,287,815 432,742 8,046,071 10,294,863 470,882 299,252 193,634 19,304,702 3,425,279 0 4,416,449 445,724 8,287,453 10,603,709 485,009 308,230 199,443 19,883,843 3,528,037 0 4,548,943 459,096 8,536,076 10,921,820 499,559 317,477 205,426 20,480,358 Current Debt Accounts Payable Income Taxes Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Other Liabilities Deferred Taxes Total Liabilities Minority Interest Preferred Stock Paid in Common Capital (Net) Retained Earnings Total Common Equity Total Liabilities and Equity 107,941 829,971 166,908 641,635 1,746,455 1,046,104 185,340 217,801 3,195,700 0 0 1,586,485 4,370,853 5,957,338 9,153,038 18,841 934,376 233,263 732,178 1,918,658 1,040,057 235,537 243,530 3,437,782 0 0 123,861 5,479,534 5,603,395 9,041,177 12,701 835,985 124,254 798,508 1,771,448 2,051,875 372,705 262,451 4,458,479 0 0 (461,782) 6,563,385 6,101,603 10,560,082 17,000 881,000 105,000 812,000 1,815,000 2,053,000 407,000 320,000 4,595,000 0 0 (663,000) 7,402,000 6,739,000 11,334,000 16,000 1,188,000 184,000 1,002,000 2,390,000 2,052,000 488,000 377,000 5,307,000 0 0 (550,000) 8,403,000 7,853,000 13,160,000 16,744 1,243,233 192,555 1,048,586 2,501,118 2,147,403 510,688 394,528 5,553,737 0 0 (1,231,779) 9,449,887 8,218,108 13,771,845 17,495 1,298,984 201,189 1,095,608 2,613,277 2,243,700 533,590 412,220 5,802,786 0 0 (1,956,711) 10,543,347 8,586,636 14,389,422 18,250 1,355,093 209,880 1,142,932 2,726,155 2,340,615 556,638 430,025 6,053,433 0 0 (2,726,118) 11,683,648 8,957,529 15,010,962 19,009 1,411,390 218,599 1,190,415 2,839,413 2,437,856 579,763 447,891 6,304,922 0 0 (3,541,245) 12,870,914 9,329,669 15,634,592 19,767 1,467,699 227,320 1,237,907 2,952,693 2,535,116 602,893 465,760 6,556,461 0 0 (4,403,239) 14,105,121 9,701,883 16,258,344 20,523 1,523,833 236,014 1,285,253 3,065,623 2,632,075 625,951 483,573 6,807,222 0 0 (5,313,145) 15,386,090 10,072,945 16,880,167 21,274 1,579,601 244,652 1,332,289 3,177,816 2,728,401 648,859 501,271 7,056,347 0 0 (6,271,891) 16,713,476 10,441,585 17,497,932 22,018 1,634,804 253,202 1,378,850 3,288,874 2,823,753 671,536 518,789 7,302,951 0 0 (7,280,278) 18,086,774 10,806,496 18,109,447 22,751 1,689,241 261,633 1,424,764 3,398,388 2,917,780 693,897 536,064 7,546,129 0 0 (8,338,967) 19,505,304 11,166,337 18,712,466 23,471 1,742,704 269,914 1,469,856 3,505,945 3,010,125 715,858 553,030 7,784,958 0 0 (9,448,473) 20,968,216 11,519,743 19,304,702 24,175 1,794,985 278,011 1,513,952 3,611,123 3,100,429 737,334 569,621 8,018,507 0 0 (10,609,150) 22,474,485 11,865,336 19,883,843 24,900 1,848,835 286,352 1,559,371 3,719,457 3,193,442 759,454 586,709 8,259,062 0 0 (11,804,647) 24,025,942 12,221,296 20,480,358 0 4,370,853 1,108,681 0 0 5,479,534 5,479,534 1,083,851 0 0 6,563,385 6,563,385 885,000 0 (46,385) 7,402,000 7,402,000 991,000 0 10,000 8,403,000 8,403,000 1,046,887 0 0 9,449,887 9,449,887 1,093,460 0 0 10,543,347 10,543,347 1,140,301 0 0 11,683,648 11,683,648 1,187,266 0 0 12,870,914 12,870,914 1,234,207 0 0 14,105,121 14,105,121 1,280,968 0 0 15,386,090 15,386,090 1,327,387 0 0 16,713,476 16,713,476 1,373,298 0 0 18,086,774 18,086,774 1,418,530 0 0 19,505,304 19,505,304 1,462,912 0 0 20,968,216 20,968,216 1,506,269 0 0 22,474,485 22,474,485 1,551,457 0 0 24,025,942 891,624 (49,664) 841,960 0.3744 7,111,383 1,154,045 5,957,338 1,155,183 (46,502) 1,108,681 0.3752 6,662,293 1,058,898 5,603,395 1,145,266 (61,415) 1,083,851 0.3778 8,166,179 2,064,576 6,101,603 971,947 (86,947) 885,000 0.3789 8,809,000 2,070,000 6,739,000 1,074,623 (83,623) 991,000 0.3759 9,921,000 2,068,000 7,853,000 1,132,413 (85,526) 1,046,887 0.3759 10,382,255 2,164,147 8,218,108 1,182,890 (89,430) 1,093,460 0.3759 10,847,831 2,261,195 8,586,636 1,233,666 (93,365) 1,140,301 0.3759 11,316,395 2,358,866 8,957,529 1,284,586 (97,319) 1,187,266 0.3759 11,786,534 2,456,864 9,329,669 1,335,488 (101,281) 1,234,207 0.3759 12,256,765 2,554,883 9,701,883 1,386,204 (105,236) 1,280,968 0.3759 12,725,542 2,652,598 10,072,945 1,436,560 (109,173) 1,327,387 0.3759 13,191,260 2,749,675 10,441,585 1,486,374 (113,076) 1,373,298 0.3759 13,652,266 2,845,770 10,806,496 1,535,464 (116,933) 1,418,530 0.3759 14,106,867 2,940,530 11,166,337 1,583,641 (120,729) 1,462,912 0.3759 14,553,339 3,033,596 11,519,743 1,630,718 (124,449) 1,506,269 0.3759 14,989,939 3,124,604 11,865,336 1,679,639 (128,182) 1,551,457 0.3759 15,439,638 3,218,342 12,221,296 2009/01/31 16,389,000 (10,334,000) 0 (3,978,000) (541,000) (140,000) 29,000 (540,000) 0 0 0 0 676,000 0 2,799,000 225,000 6,984,000 332,000 210,000 108,000 17,000 881,000 105,000 812,000 2,053,000 407,000 320,000 0 0 (663,000) 7,402,000 0 2010/01/31 17,178,000 (10,680,000) 0 (4,196,000) (590,000) (134,000) 10,000 (597,000) 0 0 0 0 2,267,000 0 2,923,000 295,000 7,018,000 321,000 204,000 132,000 16,000 1,188,000 184,000 1,002,000 2,052,000 488,000 377,000 0 0 (550,000) 8,403,000 0 Balance Sheet Statement of Retained Earnings Beg. Retained Earnings +Net Income -Common Dividends +/-Clean Surplus Plug (Ignore) =End. Retained Earnings Values for Dupont Analysis and Valuation Net Operating Income Net Financial Expense Net Income Effective Tax Rate Net Operating Assets Net Financial Obligations Total Common Equity Raw Data Inputs cut-and-paste raw data block from DataMaker file here Company Name and Ticker Common Shares Outstanding Fiscal Year End (YYYY-MM-DD) Sales (Net) Cost of Goods Sold R&D Expense SG&A Expense Depreciation & Amortization Interest Expense Non-Operating Income (Loss) Income Taxes Minority Interest in Earnings Other Income (Loss) Ext. Items & Disc. Ops. Preferred Dividends Operating Cash and Market. Sec. Receivables Inventories Other Current Assets PP&E (Net) Investments Intangibles Other Assets Current Debt Accounts Payable Income Taxes Payable Other Current Liabilities Long-Term Debt Other Liabilities Deferred Taxes Minority Interest Preferred Stock Paid in Common Capital (Net) Retained Earnings Common Dividends KOHL'S CORP 307,000 2006/01/31 13,402,217 (8,670,484) 0 (3,007,842) (307,710) (79,383) 8,992 (503,830) 0 0 0 0 286,916 1,652,065 2,237,568 89,503 4,543,832 0 221,718 121,436 107,941 829,971 166,908 641,635 1,046,104 185,340 217,801 0 0 1,586,485 4,370,853 0 KSS 2007/01/31 15,544,184 (9,890,513) 0 (3,451,196) (387,674) (74,427) 34,071 (665,764) 0 0 0 0 620,400 0 2,588,099 192,541 5,352,974 0 228,624 58,539 18,841 934,376 233,263 732,178 1,040,057 235,537 243,530 0 0 123,861 5,479,534 0 2008/01/31 16,473,734 (10,459,549) 0 (3,757,563) (452,145) (98,712) 36,296 (658,210) 0 0 0 0 663,671 0 2,855,733 204,485 6,509,819 0 219,296 107,078 12,701 835,985 124,254 798,508 2,051,875 372,705 262,451 0 0 (461,782) 6,563,385 0 A Windows vs Macintosh issue can cause the fiscal year end dates to be off by roughly 4 years. If this occurs, select and copy the 1462 cell below, select the cells with the dates, choose Paste Special Values and select Subtract or Add. 1462 Ratio Analysis Company Name Netflix Fiscal Year End Date Actual Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2006/01/31 2007/01/31 2008/01/31 2009/01/31 2010/01/31 2011/01/31 2012/01/31 2013/01/31 2014/01/31 2015/01/31 2016/01/31 2017/01/31 2018/01/31 2019/01/31 2020/01/31 2021/01/31 2022/01/31 Annual Growth Rates Sales Assets Common Equity Earnings Free Cash Flow to Investors Sustainable Growth Rate 16.0% -1.2% -5.9% 31.7% 6.0% 16.8% 8.9% -2.2% -122.4% 18.5% -0.5% 7.3% 10.4% -18.3% #N/A 13.8% 4.8% 16.1% 16.5% 12.0% -109.7% 13.6% 4.6% 4.6% 4.6% 5.6% #N/A 13.0% 4.5% 4.5% 4.5% 4.4% 6.9% 13.0% 4.3% 4.3% 4.3% 4.3% 6.7% 13.0% 4.2% 4.2% 4.2% 4.1% 6.4% 13.0% 4.0% 4.0% 4.0% 4.0% 6.2% 13.0% 3.8% 3.8% 3.8% 3.8% 6.0% 13.0% 3.7% 3.7% 3.7% 3.6% 5.8% 12.9% 3.5% 3.5% 3.5% 3.5% 5.6% 12.9% 3.3% 3.3% 3.3% 3.3% 5.4% 12.9% 3.2% 3.2% 3.2% 3.1% 5.2% 12.9% 3.0% 3.0% 3.0% 3.0% 5.0% 12.9% 3.0% 3.0% 3.0% 3.0% 3.0% 12.9% 0.192 0.188 0.168 0.185 0.181 0.154 0.138 0.135 0.115 0.136 0.135 0.115 0.130 0.129 0.112 0.130 0.129 0.111 0.130 0.129 0.111 0.130 0.129 0.111 0.130 0.129 0.111 0.130 0.129 0.111 0.129 0.129 0.111 0.129 0.128 0.111 0.129 0.128 0.111 0.129 0.128 0.111 0.129 0.128 0.110 0.129 0.128 0.110 0.063 0.071 1.709 1.574 0.192 0.066 1.681 1.675 0.185 0.054 1.497 1.705 0.138 0.058 1.403 1.679 0.136 0.058 1.335 1.676 0.130 0.058 1.334 1.676 0.130 0.058 1.333 1.676 0.130 0.058 1.332 1.676 0.130 0.058 1.331 1.676 0.130 0.058 1.330 1.676 0.130 0.058 1.329 1.676 0.129 0.058 1.328 1.676 0.129 0.058 1.327 1.676 0.129 0.058 1.326 1.676 0.129 0.058 1.325 1.676 0.129 0.058 1.325 1.676 0.129 0.067 0.074 2.257 0.168 0.042 0.126 0.191 0.192 0.070 2.222 0.154 0.039 0.115 0.267 0.185 0.059 1.931 0.115 0.042 0.072 0.322 0.138 0.063 1.834 0.115 0.040 0.074 0.284 0.136 0.063 1.771 0.112 0.040 0.071 0.263 0.130 0.063 1.769 0.111 0.040 0.071 0.263 0.130 0.063 1.768 0.111 0.040 0.071 0.263 0.130 0.063 1.767 0.111 0.040 0.071 0.263 0.130 0.063 1.765 0.111 0.040 0.071 0.263 0.130 0.063 1.764 0.111 0.040 0.071 0.263 0.130 0.063 1.763 0.111 0.040 0.070 0.263 0.129 0.063 1.761 0.111 0.040 0.070 0.263 0.129 0.063 1.760 0.111 0.040 0.070 0.263 0.129 0.063 1.758 0.111 0.040 0.070 0.263 0.129 0.063 1.757 0.110 0.040 0.070 0.263 0.129 0.063 1.757 0.110 0.040 0.070 0.263 0.129 0.353 0.129 0.106 0.066 0.067 0.364 0.142 0.117 0.073 0.074 0.365 0.137 0.110 0.068 0.070 0.369 0.127 0.094 0.058 0.059 0.378 0.134 0.100 0.062 0.063 0.378 0.134 0.100 0.063 0.063 0.378 0.134 0.100 0.063 0.063 0.378 0.134 0.100 0.063 0.063 0.378 0.134 0.100 0.063 0.063 0.378 0.134 0.100 0.063 0.063 0.378 0.134 0.100 0.063 0.063 0.378 0.134 0.100 0.063 0.063 0.378 0.134 0.100 0.063 0.063 0.378 0.134 0.100 0.062 0.063 0.378 0.134 0.100 0.062 0.063 0.378 0.134 0.100 0.062 0.063 0.378 0.134 0.100 0.062 0.063 2.257 7.530 19.396 89.043 31.441 3.141 2.222 9.505 0.000 94.985 30.119 2.777 1.931 8.476 0.000 99.863 30.490 2.429 1.834 6.853 0.000 97.778 34.949 2.454 1.771 5.647 0.000 97.677 39.222 2.503 1.769 5.643 0.000 97.753 39.269 2.501 1.768 5.638 0.000 97.828 39.315 2.499 1.767 5.634 0.000 97.904 39.362 2.498 1.765 5.630 0.000 97.980 39.408 2.496 1.764 5.625 0.000 98.057 39.456 2.494 1.763 5.621 0.000 98.133 39.503 2.492 1.761 5.617 0.000 98.210 39.550 2.490 1.760 5.612 0.000 98.287 39.598 2.488 1.758 5.608 0.000 98.364 39.645 2.486 1.757 5.603 0.000 98.442 39.693 2.484 1.757 5.603 0.000 98.442 39.693 2.484 0.194 0.189 1.421 2.740 0.338 1.083 0.814 0.307 0.734 0.771 0.263 0.831 1.015 0.263 0.800 0.781 0.263 0.798 0.780 0.263 0.797 0.780 0.263 0.796 0.779 0.263 0.795 0.779 0.263 0.794 0.778 0.263 0.792 0.778 0.263 0.791 0.777 0.263 0.790 0.776 0.263 0.789 0.776 0.263 0.787 0.775 0.263 0.787 0.775 2.443 1.110 17.840 21.716 1.773 0.323 24.384 29.592 2.102 0.375 18.280 22.861 2.039 0.372 10.971 14.836 2.295 0.949 12.776 17.179 2.295 0.949 13.164 17.578 2.295 0.949 13.151 17.564 2.295 0.949 13.137 17.551 2.295 0.949 13.124 17.537 2.295 0.949 13.110 17.524 2.295 0.949 13.096 17.510 2.295 0.949 13.083 17.496 2.295 0.949 13.069 17.483 2.295 0.949 13.055 17.469 2.295 0.949 13.041 17.455 2.295 0.949 13.028 17.441 2.295 0.949 13.028 17.441 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Profitability Return on Equity Return on Equity (b4 non-recurring) Return on Net Operating Assets Basic Dupont Model Net Profit Margin x Total Asset Turnover x Total Leverage = Return on Equity Advanced Dupont Model Net Operating Margin x Net Operating Asset Turnover = Return on Net Operating Assets Net Borrowing Cost (NBC) Spread (RNOA - NBC) Financial Leverage (LEV) ROE = RNOA + LEV*Spread Margin Analysis Gross Margin EBITDA Margin EBIT Margin Net Operating Margin (b4 non-rec.) Net Operating Margin Turnover Analysis Net Operating Asset Turnover Net Working Capital Turnover Avge Days to Collect Receivables Avge Inventory Holding Period Avge Days to Pay Payables PP&E Turnover Analysis of Leverage - Long-Term Capital Structure Debt to Equity Ratio FFO to Total Debt CFO to Total Debt Analysis of Leverage - Short-Term Liquidity Current Ratio Quick Ratio EBIT Interest Coverage EBITDA Interest Coverage Fiscal Year Cash Flow Analysis ($000) Company Name Netflix Fiscal Year End Date Pro Forma Statement of Cash Flows Operating: Net Income +Depreciation & Amortization +Increase in Deferred Taxes +Increase in Other Liabilities +Minority Interest in Earnings +Preferred Dividends =Funds From Operations -Increase in Receivables -Increase in Inventory -Increase in Other Current Assets +Increase in Accounts Payable +Increase in Taxes Payable +Increase in Other Curr. Liabilities =Cash From Operations Actual 2007/01/31 Actual 2008/01/31 Actual 2009/01/31 Actual 2010/01/31 Forecast 2011/01/31 Forecast 2012/01/31 Forecast 2013/01/31 Forecast 2014/01/31 Forecast 2015/01/31 Forecast 2016/01/31 Forecast 2017/01/31 Forecast 2018/01/31 Forecast 2019/01/31 Forecast 2020/01/31 Forecast 2021/01/31 1,108,681 387,674 25,729 50,197 0 0 1,572,281 1,652,065 (350,531) (103,038) 104,405 66,355 90,543 3,032,080 1,083,851 452,145 18,921 137,168 0 0 1,692,085 0 (267,634) (11,944) (98,391) (109,009) 66,330 1,271,437 885,000 541,000 57,549 34,295 0 0 1,517,844 0 56,733 (20,515) 45,015 (19,254) 13,492 1,593,315 991,000 590,000 57,000 81,000 0 0 1,719,000 0 (124,000) (70,000) 307,000 79,000 190,000 2,101,000 1,046,887 604,888 17,528 22,688 0 0 1,691,991 0 (135,898) (13,715) 55,233 8,555 46,586 1,652,751 1,093,460 632,501 17,692 22,901 0 0 1,766,554 0 (137,172) (13,844) 55,751 8,635 47,022 1,726,946 1,140,301 660,331 17,806 23,048 0 0 1,841,485 0 (138,052) (13,933) 56,109 8,690 47,324 1,801,624 1,187,266 688,298 17,865 23,125 0 0 1,916,555 0 (138,516) (13,980) 56,297 8,719 47,483 1,876,559 1,234,207 716,314 17,869 23,130 0 0 1,991,520 0 (138,543) (13,982) 56,308 8,721 47,492 1,951,517 1,280,968 744,289 17,814 23,058 0 0 2,066,130 0 (138,115) (13,939) 56,134 8,694 47,345 2,026,250 1,327,387 772,130 17,697 22,908 0 0 2,140,123 0 (137,213) (13,848) 55,768 8,637 47,037 2,100,503 1,373,298 799,740 17,518 22,676 0 0 2,213,232 0 (135,825) (13,708) 55,204 8,550 46,561 2,174,013 1,418,530 827,018 17,275 22,361 0 0 2,285,185 0 (133,938) (13,518) 54,437 8,431 45,914 2,246,511 1,462,912 853,864 16,966 21,961 0 0 2,355,703 0 (131,543) (13,276) 53,463 8,281 45,093 2,317,721 1,506,269 880,173 16,591 21,476 0 0 2,424,508 0 (128,634) (12,982) 52,281 8,097 44,096 2,387,366 Investing: -Capital Expenditures -Increase in Investments -Purchases of Intangibles -Increase in Other Assets =Cash From Investing (1,196,816) 0 (6,906) 62,897 (1,140,825) (1,608,990) 0 9,328 (48,539) (1,648,201) (1,015,181) (332,000) 9,296 (922) (1,338,807) (624,000) 11,000 6,000 (24,000) (631,000) (931,174) (14,924) (9,485) (6,137) (961,720) (961,844) (15,064) (9,573) (6,195) (992,676) (991,788) (15,161) (9,635) (6,234) (1,022,817) (1,020,868) (15,212) (9,667) (6,255) (1,052,003) (1,048,950) (15,215) (9,669) (6,256) (1,080,090) (1,075,897) (15,168) (9,639) (6,237) (1,106,941) (1,101,574) (15,069) (9,576) (6,196) (1,132,415) (1,125,850) (14,916) (9,479) (6,134) (1,156,380) (1,148,598) (14,709) (9,348) (6,049) (1,178,703) (1,169,693) (14,446) (9,181) (5,940) (1,199,260) (1,189,019) (14,126) (8,978) (5,809) (1,217,932) Financing: +Increase in Debt -Dividends Paid to Minority Interest -Dividends Paid on Preferred +Increase in Pref. Stock -Dividends Paid on Common +/-Net Issuance of Common Stock +/-Clean Surplus Plug (Ignore) =Cash From Financing (95,147) 0 0 0 0 (1,462,624) 0 (1,557,771) 1,005,678 0 0 0 0 (585,643) 0 420,035 5,424 0 0 0 0 (201,218) (46,385) (242,179) (2,000) 0 0 0 0 113,000 10,000 121,000 96,147 0 0 0 0 (681,779) 0 (585,632) 97,048 0 0 0 0 (724,931) 0 (627,883) 97,671 0 0 0 0 (769,408) 0 (671,737) 97,999 0 0 0 0 (815,126) 0 (717,127) 98,018 0 0 0 0 (861,994) 0 (763,976) 97,715 0 0 0 0 (909,906) 0 (812,191) 97,077 0 0 0 0 (958,746) 0 (861,669) 96,095 0 0 0 0 (1,008,387) 0 (912,292) 94,760 0 0 0 0 (1,058,690) 0 (963,930) 93,066 0 0 0 0 (1,109,506) 0 (1,016,440) 91,008 0 0 0 0 (1,160,677) 0 (1,069,669) 333,484 286,916 620,400 43,271 620,400 663,671 12,329 663,671 676,000 1,591,000 676,000 2,267,000 105,399 2,267,000 2,372,399 106,387 2,372,399 2,478,786 107,069 2,478,786 2,585,855 107,429 2,585,855 2,693,284 107,450 2,693,284 2,800,735 107,118 2,800,735 2,907,852 106,419 2,907,852 3,014,271 105,342 3,014,271 3,119,614 103,879 3,119,614 3,223,492 102,021 3,223,492 3,325,514 99,765 3,325,514 3,425,279 Net Change in Cash + Beginning Cash Balance = Ending Cash Balance Free Cash Flow to Common Equity Net Income - Increase in Common Equity +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Common Equity 1,108,681 353,943 0 1,462,624 1,083,851 (498,208) 0 585,643 885,000 (637,397) (46,385) 201,218 991,000 (1,114,000) 10,000 (113,000) 1,046,887 (365,108) 0 681,779 1,093,460 (368,529) 0 724,931 1,140,301 (370,893) 0 769,408 1,187,266 (372,140) 0 815,126 1,234,207 (372,213) 0 861,994 1,280,968 (371,062) 0 909,906 1,327,387 (368,641) 0 958,746 1,373,298 (364,911) 0 1,008,387 1,418,530 (359,841) 0 1,058,690 1,462,912 (353,406) 0 1,109,506 1,506,269 (345,592) 0 1,160,677 Computation based on SCF: +Cash From Operations -Increase in Cash +Cash From Investing +Increase in Debt -Dividends Paid to Minority Interest -Dividends Paid on Preferred +Increase in Preferred Stock +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Common Equity 3,032,080 (333,484) (1,140,825) (95,147) 0 0 0 0 1,462,624 1,271,437 (43,271) (1,648,201) 1,005,678 0 0 0 0 585,643 1,593,315 (12,329) (1,338,807) 5,424 0 0 0 (46,385) 201,218 2,101,000 (1,591,000) (631,000) (2,000) 0 0 0 10,000 (113,000) 1,652,751 (105,399) (961,720) 96,147 0 0 0 0 681,779 1,726,946 (106,387) (992,676) 97,048 0 0 0 0 724,931 1,801,624 (107,069) (1,022,817) 97,671 0 0 0 0 769,408 1,876,559 (107,429) (1,052,003) 97,999 0 0 0 0 815,126 1,951,517 (107,450) (1,080,090) 98,018 0 0 0 0 861,994 2,026,250 (107,118) (1,106,941) 97,715 0 0 0 0 909,906 2,100,503 (106,419) (1,132,415) 97,077 0 0 0 0 958,746 2,174,013 (105,342) (1,156,380) 96,095 0 0 0 0 1,008,387 2,246,511 (103,879) (1,178,703) 94,760 0 0 0 0 1,058,690 2,317,721 (102,021) (1,199,260) 93,066 0 0 0 0 1,109,506 2,387,366 (99,765) (1,217,932) 91,008 0 0 0 0 1,160,677 Financing Flows: +Dividends Paid -Net Issuance of Common Stock = Free Cash Flow to Common Equity 0 1,462,624 1,462,624 0 585,643 585,643 0 201,218 201,218 0 (113,000) (113,000) 0 681,779 681,779 0 724,931 724,931 0 769,408 769,408 0 815,126 815,126 0 861,994 861,994 0 909,906 909,906 0 958,746 958,746 0 1,008,387 1,008,387 0 1,058,690 1,058,690 0 1,109,506 1,109,506 0 1,160,677 1,160,677 1,155,183 449,090 0 1,604,273 1,145,266 (1,503,886) 0 (358,620) 971,947 (642,821) (46,385) 282,741 1,074,623 (1,112,000) 10,000 (27,377) 1,132,413 (461,255) 0 671,158 1,182,890 (465,577) 0 717,314 1,233,666 (468,564) 0 765,102 1,284,586 (470,139) 0 814,447 1,335,488 (470,232) 0 865,257 1,386,204 (468,777) 0 917,427 1,436,560 (465,718) 0 970,842 1,486,374 (461,006) 0 1,025,368 1,535,464 (454,601) 0 1,080,863 1,583,641 (446,472) 0 1,137,169 1,630,718 (436,600) 0 1,194,118 3,032,080 (333,484) (1,140,825) 74,427 (27,925) 0 1,604,273 1,271,437 (43,271) (1,648,201) 98,712 (37,297) 0 (358,620) 1,593,315 (12,329) (1,338,807) 140,000 (53,053) (46,385) 282,741 2,101,000 (1,591,000) (631,000) 134,000 (50,377) 10,000 (27,377) 1,652,751 (105,399) (961,720) 137,049 (51,523) 0 671,158 1,726,946 (106,387) (992,676) 143,305 (53,875) 0 717,314 1,801,624 (107,069) (1,022,817) 149,610 (56,245) 0 765,102 1,876,559 (107,429) (1,052,003) 155,947 (58,627) 0 814,447 1,951,517 (107,450) (1,080,090) 162,294 (61,014) 0 865,257 2,026,250 (107,118) (1,106,941) 168,633 (63,397) 0 917,427 2,100,503 (106,419) (1,132,415) 174,941 (65,768) 0 970,842 2,174,013 (105,342) (1,156,380) 181,196 (68,120) 0 1,025,368 2,246,511 (103,879) (1,178,703) 187,377 (70,443) 0 1,080,863 2,317,721 (102,021) (1,199,260) 193,459 (72,730) 0 1,137,169 2,387,366 (99,765) (1,217,932) 199,420 (74,971) 0 1,194,118 0 74,427 (27,925) 0 0 1,462,624 95,147 0 1,604,273 0 98,712 (37,297) 0 0 585,643 (1,005,678) 0 (358,620) 0 140,000 (53,053) 0 0 201,218 (5,424) 0 282,741 0 134,000 (50,377) 0 0 (113,000) 2,000 0 (27,377) 0 137,049 (51,523) 0 0 681,779 (96,147) 0 671,158 0 143,305 (53,875) 0 0 724,931 (97,048) 0 717,314 0 149,610 (56,245) 0 0 769,408 (97,671) 0 765,102 0 155,947 (58,627) 0 0 815,126 (97,999) 0 814,447 0 162,294 (61,014) 0 0 861,994 (98,018) 0 865,257 0 168,633 (63,397) 0 0 909,906 (97,715) 0 917,427 0 174,941 (65,768) 0 0 958,746 (97,077) 0 970,842 0 181,196 (68,120) 0 0 1,008,387 (96,095) 0 1,025,368 0 187,377 (70,443) 0 0 1,058,690 (94,760) 0 1,080,863 0 193,459 (72,730) 0 0 1,109,506 (93,066) 0 1,137,169 0 199,420 (74,971) 0 0 1,160,677 (91,008) 0 1,194,118 1,814,801 (693,689) 25,729 1,146,841 387,674 34,071 0 0 1,568,586 1,126,315 (1,196,816) 0 (6,906) 62,897 50,197 0 1,604,273 1,804,477 (695,507) 18,921 1,127,891 452,145 36,296 0 0 1,616,332 (463,919) (1,608,990) 0 9,328 (48,539) 137,168 0 (358,620) 1,536,000 (593,053) 57,549 1,000,496 541,000 29,000 0 0 1,570,496 63,142 (1,015,181) (332,000) 9,296 (922) 34,295 (46,385) 282,741 1,712,000 (647,377) 57,000 1,121,623 590,000 10,000 0 0 1,721,623 (1,209,000) (624,000) 11,000 6,000 (24,000) 81,000 10,000 (27,377) 1,804,138 (682,190) 17,528 1,139,476 604,888 10,465 0 0 1,754,829 (144,639) (931,174) (14,924) (9,485) (6,137) 22,688 0 671,158 1,884,555 (712,599) 17,692 1,189,648 632,501 10,934 0 0 1,833,083 (145,994) (961,844) (15,064) (9,573) (6,195) 22,901 0 717,314 1,965,447 (743,187) 17,806 1,240,065 660,331 11,407 0 0 1,911,803 (146,931) (991,788) (15,161) (9,635) (6,234) 23,048 0 765,102 2,046,568 (773,862) 17,865 1,290,571 688,298 11,880 0 0 1,990,749 (147,425) (1,020,868) (15,212) (9,667) (6,255) 23,125 0 814,447 2,127,661 (804,527) 17,869 1,341,003 716,314 12,354 0 0 2,069,671 (147,454) (1,048,950) (15,215) (9,669) (6,256) 23,130 0 865,257 2,208,457 (835,080) 17,814 1,391,191 744,289 12,827 0 0 2,148,307 (146,998) (1,075,897) (15,168) (9,639) (6,237) 23,058 0 917,427 2,288,678 (865,415) 17,697 1,440,961 772,130 13,296 0 0 2,226,387 (146,039) (1,101,574) (15,069) (9,576) (6,196) 22,908 0 970,842 2,368,037 (895,424) 17,518 1,490,131 799,740 13,761 0 0 2,303,632 (144,561) (1,125,850) (14,916) (9,479) (6,134) 22,676 0 1,025,368 2,446,241 (924,997) 17,275 1,538,519 827,018 14,219 0 0 2,379,757 (142,552) (1,148,598) (14,709) (9,348) (6,049) 22,361 0 1,080,863 2,522,992 (954,020) 16,966 1,585,938 853,864 14,669 0 0 2,454,471 (140,004) (1,169,693) (14,446) (9,181) (5,940) 21,961 0 1,137,169 2,597,989 (982,380) 16,591 1,632,200 880,173 15,109 0 0 2,527,482 (136,908) (1,189,019) (14,126) (8,978) (5,809) 21,476 0 1,194,118 Free Cash Flow to all Investors Net Operating Income - Increase in Net Operating Assets +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Investors Computation based on SCF: Cash From Operations -Increase in Operating Cash +Cash from Investing +Interest Expense -Tax Shield on Interest +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Investors Financing Flows: +Dividends on Common Stock +Interest Expense -Tax Shield on Interest +Dividends on Preferred Stock +Dividends Paid to Minority Interest -Net Issuance of Common Stock -Net Issuance of Debt -Net Issuance of Preferred Stock =Free Cash Flow to Investors Traditional Computation of FCF: EBIT -Taxes on EBIT +Increase in Deferred Taxes = NOPLAT +Depreciation & Amortization +Non-Operating Income (Loss) +Other Income (Loss) +Ext. Items & Disc. Ops. =Gross Cash Flow -Increase in Working Capital -Capital Expenditures -Increase in Investments -Purchases of Intangibles -Increase in Other Assets +Increase in Other Liabilities +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Investors Credit Analysis Company Name Netflix Fiscal Year End Date Actual Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2006/01/31 2007/01/31 2008/01/31 2009/01/31 2010/01/31 2011/01/31 2012/01/31 2013/01/31 2014/01/31 2015/01/31 2016/01/31 2017/01/31 2018/01/31 2019/01/31 2020/01/31 2021/01/31 2022/01/31 Analysis of Leverage - Long-Term Capital Structure Debt to Equity Ratio FFO to Total Debt CFO to Total Debt Analysis of Leverage - Short-Term Liquidity Current Ratio Quick Ratio EBIT Interest Coverage EBITDA Interest Coverage Analysis of Credit Risk Net Income to Total Assets implied default probability Total Liabilities to Total Assets implied default probability Quick Ratio implied default probability EBIT to Interest Expense implied default probability Inventory Holding Period implied default probability Annual Sales Growth implied default probability Average Implied Default Probability Fiscal Year 0.194 0.189 1.421 2.740 0.338 1.083 0.814 0.307 0.734 0.771 0.263 0.831 1.015 0.263 0.800 0.781 0.263 0.798 0.780 0.263 0.797 0.780 0.263 0.796 0.779 0.263 0.795 0.779 0.263 0.794 0.778 0.263 0.792 0.778 0.263 0.791 0.777 0.263 0.790 0.776 0.263 0.789 0.776 0.263 0.787 0.775 0.263 0.787 0.775 2.443 1.110 17.840 21.716 1.773 0.323 24.384 29.592 2.102 0.375 18.280 22.861 2.039 0.372 10.971 14.836 2.295 0.949 12.776 17.179 2.295 0.949 13.164 17.578 2.295 0.949 13.151 17.564 2.295 0.949 13.137 17.551 2.295 0.949 13.124 17.537 2.295 0.949 13.110 17.524 2.295 0.949 13.096 17.510 2.295 0.949 13.083 17.496 2.295 0.949 13.069 17.483 2.295 0.949 13.055 17.469 2.295 0.949 13.041 17.455 2.295 0.949 13.028 17.441 2.295 0.949 13.028 17.441 0.092 2.0% 0.349 2.5% 1.110 4.0% 17.84 1.5% 94.19 5.5% 0.0% 4.2% 3.3% 0.123 2.0% 0.380 2.5% 0.323 9.0% 24.38 1.0% 95.51 5.5% 16.0% 3.2% 3.9% 0.103 2.0% 0.422 3.0% 0.375 9.0% 18.28 1.5% 99.65 5.5% 6.0% 3.0% 4.0% 0.078 2.0% 0.405 3.0% 0.372 9.0% 10.97 1.5% 98.86 5.5% -0.5% 4.2% 4.2% 0.075 2.0% 0.403 3.0% 0.949 4.2% 12.78 1.5% 99.90 5.5% 4.8% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.16 1.5% 99.90 5.5% 4.6% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.15 1.5% 99.90 5.5% 4.5% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.14 1.5% 99.90 5.5% 4.3% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.12 1.5% 99.90 5.5% 4.2% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.11 1.5% 99.90 5.5% 4.0% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.10 1.5% 99.90 5.5% 3.8% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.08 1.5% 99.90 5.5% 3.7% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.07 1.5% 99.90 5.5% 3.5% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.06 1.5% 99.90 5.5% 3.3% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.04 1.5% 99.90 5.5% 3.2% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.03 1.5% 99.90 5.5% 3.0% 3.2% 3.2% 0.076 2.0% 0.403 3.0% 0.949 4.2% 13.03 1.5% 99.90 5.5% 3.0% 3.2% 3.2% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Lookup Table of default probabilit decile 1 min decile 2 min decile 3 min decile 4 min decile 5 min decile 6 min decile 7 min decile 8 min decile 9 min decile 10 NI to TA thresholds -0.448 -0.161 -0.049 0.001 0.022 0.038 0.056 0.079 0.118 NI to TA default rates 0.083 0.08 0.072 0.055 0.045 0.030 0.025 0.020 0.020 0.020 TL to TA thresholds 0.175 0.283 0.385 0.476 0.558 0.633 0.709 0.816 1.030 TL to TA default rates 0.02 0.022 0.025 0.030 0.035 0.045 0.055 0.070 0.090 0.100 Quick Ratio thresholds 0.382 0.522 0.809 0.994 1.200 1.470 1.890 2.530 4.550 Quick Ratio default rates 0.09 0.065 0.05 0.042 0.040 0.035 0.025 0.020 0.015 0.010 EBIT to Int thresholds -17.4 -3.6 -0.139 1.25 2.210 3.380 5.210 9.160 23.800 EBIT to Int default rates 0.075 0.09 0.085 0.070 0.050 0.030 0.021 0.018 0.015 0.010 Inv Holding thresholds 0.365 2.56 14.24 31.39 50 70.080 91.980 121.540 174.470 Inv Holding default rates 0.03 0.035 0.039 0.040 0.042 0.045 0.049 0.055 0.060 0.070 Sales Growth thresholds -0.203 -0.063 0.003 0.05 0.098 0.158 0.244 0.398 0.797 Sales Growth default rates 0.069 0.055 0.042 0.032 0.030 0.030 0.032 0.042 0.050 0.065 Forecasting Assumptions Company Name Netflix Actual 2007/01/31 Actual 2008/01/31 Actual 2009/01/31 Actual 2010/01/31 Forecast 2011/01/31 Forecast 2012/01/31 Forecast 2013/01/31 Forecast 2014/01/31 Forecast 2015/01/31 Forecast 2016/01/31 Forecast 2017/01/31 Forecast 2018/01/31 Forecast 2019/01/31 Forecast 2020/01/31 TERMINAL YEAR Forecast 2021/01/31 0.192 0.185 0.138 0.136 0.130 0.130 0.130 0.130 0.130 0.130 0.129 0.129 0.129 0.129 0.129 16.0% 63.6% 0.0% 22.2% 7.5% 6.7% 0.2% 37.5% 0.0% 0.0% 0.0% 0.0% 6.0% 63.5% 0.0% 22.8% 7.3% 6.3% 0.2% 37.8% 0.0% 0.0% 0.0% 0.0% -0.5% 63.1% 0.0% 24.3% 7.8% 6.8% 0.2% 37.9% 0.0% 0.0% 0.0% 0.0% 4.8% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 4.6% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 4.5% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 4.3% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 4.2% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 4.0% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 3.8% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 3.7% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 3.5% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 3.3% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 3.2% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 3.0% 62.2% 0.0% 24.4% 8.2% 6.5% 0.1% 37.6% 0.0% 0.0% 0.0% 0.0% 2.1% 12.3% 25.8% 0.7% 9.6% 1.2% 4.8% 4.0% 0.0% 26.2% 1.2% 9.4% 1.5% 4.7% 4.0% 0.0% 27.3% 1.2% 8.0% 0.8% 4.8% 4.1% 0.0% 27.1% 1.4% 8.5% 0.6% 5.0% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 13.2% 0.0% 27.4% 1.7% 11.1% 1.1% 5.8% 33.9% 0.0% 1.7% 0.9% 34.4% 0.0% 1.5% 0.4% 39.5% 0.0% 1.3% 0.6% 42.6% 2.0% 1.3% 0.7% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 40.9% 1.9% 1.2% 0.8% 1.4% 1.6% 1.5% 1.6% 2.3% 1.6% 2.5% 2.0% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 2.8% 2.2% 1.2% 11.4% 0.0% 0.0% 0.0% 0.2% 11.5% 0.0% 0.0% 0.0% 0.1% 19.4% 0.0% 0.0% 0.0% 0.1% 18.1% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% 0.1% 15.6% 0.0% 0.0% 0.0% Estimated Price/Share=$66.29 Fiscal Year End Date Actual 2006/01/31 Implied Return on Equity Income Statement Assumptions Sales Growth Cost of Goods Sold/Sales R&D/Sales SG&A/Sales Dep&Amort/Avge PP&E and Intang. Net Interest Expense/Avge Net Debt Non-Operating Income/Sales Effective Tax Rate Minority Interest/After Tax Income Other Income/Sales Ext. Items & Disc. Ops./Sales Pref. Dividends/Avge Pref. Stock Balance Sheet Assumptions Working Capital Assumptions Ending Operating Cash/Sales Ending Receivables/Sales Ending Inventories/COGS Ending Other Current Assets/Sales Ending Accounts Payable/COGS Ending Taxes Payable/Sales Ending Other Current Liabs/Sales Other Operating Asset Assumptions Ending Net PP&E/Sales Ending Investments/Sales Ending Intangibles/Sales Ending Other Assets/Sales Other Operating Liability Assumptions Other Liabilities/Sales Deferred Taxes/Sales Financing Assumptions Current Debt/Total Assets Long-Term Debt/Total Assets Minority Interest/Total Assets Preferred Stock/Total Assets Dividend Payout Ratio 64.7% 0.0% 22.4% 0.1% 37.4% 0.0% 0.0% 0.0% Valuation Parameters Estimated Price/Share=$66.29 Company Name: Netflix Required Valuation Parameters (to compute value of common equity): Enter Cost of Equity Capital: Enter Value of Contingent Claims on Common Equity ($000): Enter Date of Valuation: Enter Dilution Factor for Splits Occurring Since Latest Fiscal Year End: Optional Valuation Parameters (to compute value to all investors): Enter Cost of Net Debt: Enter Cost of Preferred Stock: Enter Cost of Minority Interest: Adjust the Weighted Average Cost of Capital Input such that the two equity values below are approximately equal: 10.00% 0 2016/09/27 1.00 8.00% 9.00% 10.00% 9.3720% up Residual Income Valuation ($000) Company Name Most Recent Fiscal Year End Date of Valuation Cost of Common Equity Teriminal Growth Rate Netflix Fiscal Year of Forecast Valuation to Common Equity Net Income Common Equity at Beginning of Year Residual Income Present Value of Residual Income Present Value Beyond 10 Years Present Value of First 10 Years Common Equity as of 1/31/2010 Forecast Equity Value Before Time Adj. Forecasted Value as of Valuation Date Less Value of Contingent Equity Claims Value Attributable to Common Equity Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecast Price/Share 1/31/2010 9/27/2016 10.00% 3.00% 2011/01/31 2012/01/31 2013/01/31 2014/01/31 2015/01/31 2016/01/31 2017/01/31 2018/01/31 2019/01/31 2020/01/31 2021/01/31 2022/01/31 1,093,460 8,218,108 271,649 224,503 1,140,301 8,586,636 281,637 211,598 1,187,266 8,957,529 291,513 199,108 1,234,207 9,329,669 301,241 187,047 1,280,968 9,701,883 310,780 175,427 1,327,387 10,072,945 320,092 164,258 1,373,298 10,441,585 329,139 153,546 1,418,530 10,806,496 337,881 143,294 1,462,912 11,166,337 346,279 133,505 1,506,269 11,519,743 354,295 124,178 1,551,457 11,865,336 364,924 116,276 137,049 2,068,000 (28,391) (26,288) 1,438,346 143,305 2,164,147 (29,827) (25,572) 149,610 2,261,195 (31,285) (24,835) 155,947 2,358,866 (32,762) (24,081) 162,294 2,456,864 (34,255) (23,313) 168,633 2,554,883 (35,758) (22,534) 174,941 2,652,598 (37,267) (21,745) 181,196 2,749,675 (38,778) (20,950) 187,377 2,845,770 (40,285) (20,153) 193,459 2,940,530 (41,784) (19,354) 199,420 3,033,596 (43,268) (18,557) 205,402 3,124,604 (44,566) (17,698) Dividends to Preferred Stockholders Beginning Book Value of Preferred Stock Residual Income to Preferred Stock Present Value of Preferred Residual Income Value of Preferred Stock 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Minority Interest in Earnings Beginning Book Value of Minority Interest Residual Income to Minority Interest Present Value of MI Residual Income Value of Minority Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,132,413 9,921,000 202,617 185,255 13,073,149 (1,438,346) 0 0 11,634,803 20,350,724 0 20,350,724 307,000 307,000 $66.29 1,182,890 10,382,255 209,865 175,440 1,233,666 10,847,831 217,007 165,865 1,284,586 11,316,395 224,013 156,549 1,335,488 11,786,534 230,854 147,505 1,386,204 12,256,765 237,500 138,748 1,436,560 12,725,542 243,922 130,289 1,486,374 13,191,260 250,089 122,137 1,535,464 13,652,266 255,973 114,298 1,583,641 14,106,867 261,546 106,779 1,630,718 14,553,339 266,779 99,583 1,679,639 14,989,939 274,782 93,781 Valuation to All Investors Cost of Debt Cost of Preferred Stock Cost of Minority Interest After Tax Weighted Average Cost of Capital Net Interest Expense to Net Debtholders Beginning Book Value of Debt Residual Interest Expense Present Value of Residual Interest Income Value of Debt Net Operating Income Beginning Net Operating Assets Residual Income to all Investors Present Value of Residual Investor Income Entity Value Less Value of Debt Less Value of Preferred Stock Less Value of Minority Interest Forecast Equity Value Before Time Adj. Forecasted Value as of Valuation Date Less Value of Contingent Equity Claims Value Attributable to Common Equity Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecast Price/Share 1,046,887 7,853,000 261,587 237,806 1,951,370 1,830,093 7,853,000 11,634,463 20,350,131 0 20,350,131 307,000 307,000 $66.29 8.00% 9.00% 10.00% 9.37% DCF Valuations ($000) Company Name Most Recent Fiscal Year End Date of Valuation Cost of Common Equity Terminal Growth Rate Netflix Fiscal Year of Forecast Valuation to Common Equity Free Cash Flow to Common Equity Present Value of FCF Present Value Beyond 10 Years Present Value of First 10 Years Forecast Equity Value Before Time Adj. Forecasted Value as of Valuation Date Less Value of Contingent Equity Claims Value Attributable to Common Equity Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecast Price/Share 1/31/2010 9/27/2016 10.00% 3.00% 2011/01/31 2012/01/31 2013/01/31 2014/01/31 2015/01/31 2016/01/31 2017/01/31 2018/01/31 2019/01/31 2020/01/31 2021/01/31 2022/01/31 724,931 599,117 769,408 578,067 815,126 556,742 861,994 535,231 909,906 513,618 958,746 491,988 1,008,387 470,420 1,058,690 448,988 1,109,506 427,762 1,160,677 406,810 1,195,497 380,922 40,902 37,872 1,438,346 46,257 39,658 51,940 41,232 57,948 42,593 64,276 43,745 70,918 44,690 77,863 45,432 85,101 45,977 92,617 46,331 100,393 46,501 108,412 46,496 111,664 44,343 Free Cash Flow to Preferred Stock Present Value of FCF to Preferred Stock Value of Preferred Stock 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Free Cash Flow to Minority Interest Present Value of FCF to Minority Interest Value of Minority Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 671,158 613,647 13,073,149 (1,438,346) 0 0 11,634,803 20,350,724 0 20,350,724 307,000 307,000 $66.29 717,314 599,649 765,102 584,791 814,447 569,165 865,257 552,859 917,427 535,963 970,842 518,567 1,025,368 500,761 1,080,863 482,631 1,137,169 464,262 1,194,118 445,738 1,229,941 419,769 Valuation to All Investors Cost of Net Debt Cost of Preferred Stock Cost of Minority Interest After Tax Weighted Average Cost of Capital Free Cash Flow to Debt Present Value of FCF to Debt Value of Debt Free Cash Flows to Investors Present Value of FCF to Investors Entity Value Less Value of Net Debt Less Value of Preferred Stock Less Value of Minority Interest Forecast Equity Value Before Time Adj. Forecasted Value as of Valuation Date Less Value of Contingent Equity Claims Value Attributable to Common Equity Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecast Price/Share 681,779 619,799 6,392,730 5,241,733 11,634,463 20,350,131 0 20,350,131 307,000 307,000 $66.29 8.00% 9.00% 10.00% 9.37% EPS Forecaster ($000, except per share amounts) Company Name Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecasted Price at Valuation Date Netflix Fiscal Year of Forecast Net Income Common Equity Issued (Repurchased) Forecasted Price at Year End New Shares Issued (Repurchased) Shares Outstanding at End of Year Forecast EPS Consensus Analyst Forecast of EPS Forecast FiveAnalyst Year Growth RateofinGrowth EPS Consensus Forecast Rate 307,000 307,000 $66.29 Forecast 2011/01/31 1,046,887 (681,779) $28.80 (23,674) 283,326 $3.55 14% Forecast 2012/01/31 1,093,460 (724,931) $31.68 (22,884) 260,441 $4.02 Forecast 2013/01/31 1,140,301 (769,408) $34.85 (22,080) 238,361 $4.57 Forecast 2014/01/31 1,187,266 (815,126) $38.33 (21,266) 217,095 $5.21 Forecast 2015/01/31 1,234,207 (861,994) $42.16 (20,444) 196,650 $5.97 Although Although not not aa necessary necessary input input for for eVal, eVal, we we recommend recommend that that you you find find the the analyst analyst forecasts forecasts for for your your company company and and store store them them in in the the yellow-shaded yellow-shaded cells cells for for comparison comparison purposes. purposes. To obtain analyst forecasts, click here Forecast 2016/01/31 1,280,968 (909,906) $46.38 (19,619) 177,032 $6.86 Model Summary Historical Data For: Netflix Most Recent Fiscal Year End: Average ROE (last five years) Sales Growth (last five years) 2010/01/31 16.27% 6.40% Forecast Data: Forecast Horizon This Year's ROE Terminal Year's ROE This Year's Sales Growth Terminal Year's Sales Growth This Year's Forecast EPS Forecast 5 Year EPS Growth 10 years 13.03% 12.88% 4.65% 3.00% $3.55 14.09% Valuation Data: Cost of Equity Capital Valuation Date Estimated Price/Share Estimated Price/Earnings Ratio Estimated Market/Book Ratio 10.00% 2016/09/27 $66.29 18.69 2.59 Cut-and-Paste the yellow block of case data into the Raw Data Input section on the lower part of the eVal financial stateme America Online Netflix Salton Nordstrom Amazon.com Overstock City Screens Ross Stores Four Models Royal Caribbean Country Cinema Kohls Company Name and Ticker AMERICA ONLINE INC AOL Common Shares Outstanding (000) 2,255,000 Fiscal Year End (YYYY-MM-DD) 1995/06/30 1996/06/30 1997/06/30 Sales (Net) 394,290 1,094,000 2,197,000 Cost of Goods Sold (229,724) (654,000) (1,770,000) R&D Expense (64,598) (75,000) (204,000) SG&A Expense (119,764) (293,000) (605,000) Depreciation & Amortization (1,653) (7,000) (6,000) Interest Expense 0 0 0 Non-Operating Income (Loss) 867 (3,000) (87,000) Income Taxes (15,169) (32,000) (10,000) Minority Interest in Earnings 0 0 0 Other Income (Loss) 0 0 0 Ext. Items & Disc. Ops. 0 0 0 Preferred Dividends 0 0 0 Operating Cash and Market. Sec. 64,549 129,133 124,000 Receivables 32,176 42,939 65,000 Inventories 0 0 0 Other Current Assets 36,908 98,506 134,000 PP&E (Net) 70,919 101,277 233,000 Investments 0 0 81,000 Intangibles 59,935 56,638 59,000 Other Assets 140,926 530,261 137,000 Current Debt 2,329 2,435 0 Accounts Payable 84,640 105,904 68,000 Income Taxes Payable 0 0 0 Other Current Liabilities 46,393 181,567 485,000 Long-Term Debt 17,369 19,306 50,000 Other Liabilities 2,243 1,168 4,000 Deferred Taxes 35,627 135,872 86,000 Minority Interest 0 0 0 Preferred Stock 0 1 0 Paid in Common Capital (Net) 253,435 520,268 647,000 Retained Earnings (36,623) (7,767) (507,000) -Common Dividends 0 0 1998/06/30 3,091,000 (2,434,000) (333,000) (328,000) (24,000) 0 (62,000) 16,000 0 0 0 0 823,000 192,000 0 248,000 503,000 531,000 472,000 105,000 0 120,000 0 1,035,000 372,000 7,000 344,000 0 0 1,586,000 (590,000) 0 Company Name and Ticker AMAZON.COM INC Common Shares Outstanding (000) 357,140 Fiscal Year End (YYYY-MM-DD) 1996/12/31 Sales (Net) 15,746 Cost of Goods Sold (12,287) 1999/12/31 1,639,839 (1,349,194) AMZN 1997/12/31 147,787 (118,969) 1998/12/31 609,819 (476,155) R&D Expense SG&A Expense Depreciation & Amortization Interest Expense Non-Operating Income (Loss) Income Taxes Minority Interest in Earnings Other Income (Loss) Ext. Items & Disc. Ops. Preferred Dividends Operating Cash and Market. Sec. Receivables Inventories Other Current Assets PP&E (Net) Investments Intangibles Other Assets Current Debt Accounts Payable Income Taxes Payable Other Current Liabilities Long-Term Debt Other Liabilities Deferred Taxes Minority Interest Preferred Stock Paid in Common Capital (Net) Retained Earnings -Common Dividends (2,401) (7,501) 0 (5) 202 0 0 0 0 0 6,248 0 571 321 985 0 0 146 0 2,852 0 2,018 0 0 0 0 6 9,420 (6,025) Company Name and Ticker FOUR MODELS Common Shares Outstanding (000) 1,000 Fiscal Year End (YYYY-MM-DD) 1996/12/31 Sales (Net) 20,000 Cost of Goods Sold (12,000) R&D Expense 0 SG&A Expense 0 Depreciation & Amortization (2,000) Interest Expense (1,000) Non-Operating Incom