BIOMETRIX, INC.
[Equity Valuation Method] Actual
I<———- Projected —————————->I
Percent Sales Increase——> 20.0% 20.0% 20.0% 7.0%
Chapter 10; Problem 8
% of 2016 Thousands of Dollars
Income Statements Sales 2016 2017 2018 2019 2020
Sales 100.0% 20000 24000 28800 34560 36979
Cost of goods sold -50.0% -10000 -12000 -14400 -17280 -18490
Gross profit 50.0% 10000 12000 14400 17280 18490
Operating expenses -37.5% -7500 -8625 -9919 -11407 -12205
Depreciation -400 -480 -576 -691 -740
EBIT 2100 2895 3905 5182 5545
Interest -100 -100 -100 -100 -100
EBT 2000 2795 3805 5082 5445
Balance Sheets
Gross fixed assets 5400 6880 8656 10787 12132
Accumulated depreciation -400 -880 -1456 -2147 -2887
Net fixed assets 25.0% 5000 6000 7200 8640 9245
Total assets 50.0% 10000 12177 15060 18829 22399
Accounts payable 7.5% 1500 1800 2160 2592 2773
Accrued liabilities 5.0% 1000 1200 1440 1728 1849
Retained earnings 1200 2877 5160 8209 11476
Total liabilities & equity 10000 12177 15060 18829 22399
Statements of Cash Flows
Change in inventories -400 -480 -576 -242
Change in accts payable 300 360 432 181
Change in accrued liabilities 200 240 288 121
CF from operations
1857 2499 3309 3825
Change in gross fixed assets -1480 -1776 -2131 -1344
Total free cash flows to equity
177 483 19042
Present Value (40% disc rate)
$7,312
Per Share Value (1 million shares)
$7.31
Alternative Equity Valuation Process:
2016 2017 2018 2019 2020
Income Statement Flows:
Net Income 1677 2283 3049 3267
Depreciation 480 576 691 740
Required Investments:
Required net working capital 2500 3000 3600 4320 4622
Change in NWC 500 600 720 302
Change in gross fixed assets 1480 1776 2131 1344
Financing Activities:
Change in financing activities 0 0 0 0
Free Cash Flows to Equity:
Net income 1677 2283 3049 3267
Depreciation 480 576 691 740
Increase in NWC -500 -600 -720 -302
CAPEX -1480 -1776 -2131 -1344
Increase in financing inflows 0 0 0 0
Annual change in free CF 177 483 889 2360
Horizon cash flow (20% disc rate) 18152
Total free cash flows to equity 177 483 19042
Present Value (40% disc rate)
$7,312
Per Share Value (1 million shares)
$7.31