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Presentation/PPT
27/08/2022
This is based on the WOK YOW IMPORTS, INC. case found in your textbook under Chapter 14. Please read the case carefully. An excel spreadsheet is provided that has the solution to the case along with suggested answers to the case questions. Please go over the excel sheet first and make sure that you can follow the calculations for the discounted cash flow valuation method (enterprise valuation method).
All the formulas are built into the excel file so when you go over a cell, you can track how the calculation for each number on the sheet is done. Pay special attention to the financial ratios, growth assumptions, calculation of the free cash flows for the foreseeable future (5 years) and the calculation of the terminal value. These future free cash flows are then discounted back to time zero using the discount rate (WACC).
Once you feel comfortable on the model and the solutions to the case, I want you to answer the following questions:
Using the provided financial statements as a starting point:
Guidelines:
· Please copy and paste the original excel sheet into a new worksheet and make your changes on the new one for each of the models you are working on. I want to be able to follow your calculations relating to the answers to each question on a different excel worksheet in the same file. Highlight the changes that you make on the model so that your changes can be traced easily.
· You will need to make changes on the company’s operations in order to increase growth rate to 50%, and in order to justify the $31 and $56 stock valuations. In all cases be sure to explain your modeling assumptions on operating and financing of the venture and provide a summary of the four scenarios.
· This will be based on the accuracy of your calculations and more importantly, on the coherent nature of the assumptions of different strategies and their likely effect on the future projections of the financial model. For example, a more efficient inventory management system would decrease the company’s NOWC and would free up cash flow, increasing the value of the firm. I would want to see that the “improved inventory management” is mentioned in the business strategy and also the required NOWC amounts lowered in the financial model, leading to a greater company valuation. If a strategy is mentioned but its financial implications cannot be traced to the financial model, you will loose points.
· The work can be completed in a single excel file with multiple worksheets. Your answers to the 4 questions can be on one worksheet and you can reference your answers to each question the corresponding worksheet that has the relevant model. This would make it easier for me to track your answers and your financial models.
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The writer is very fast, professional and responded to the review request fast also. Thank you.
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