Question
If the Ideal Corp. were to be expected to generate FCF of $50,000 in 2015, $175,000 in 2016, and $250,000 in 2017, and the FCF is expected to grow at a constant rate of 6% from that point forward, what would be the estimated intrinsic value per share for the company’s stock at the end of 2014?
Ideal Corp. Balance Sheets
Assets
20136
20147
Cash
$ 9,000
$ 7,282
Short-term investments.
48,600
20,000
Accounts receivable
351,200
632,160
Inventories
715,200
1,287,360
total current assets
$ 1,124,000
$ 1,946,802
Gross fixed assets
491,000
1,202,950
Less: accumulated depreciation
146,200
263,160
net fixed assets
$ 344,800
$ 939,790
Total assets
$ 1,468,800
$ 2,886,592
Liabilities and equity
20136
20147
Accounts payable
$ 145,600
$ 324,000
Notes payable
200,000
720,000
Accruals
136,000
284,960
total current liabilities
$ 481,600
$ 1,328,960
Long-term debt
323,432
1,000,000
Common stock (100,000 shares)
460,000
460,000
Retained earnings
203,768
97,632
total equity
$ 663,768
$ 557,632
Total liabilities and equity
$ 1,468,800
$ 2,886,592
Income Statements
20136
20147
Sales
$ 3,432,000
$ 5,834,400
Cost of goods sold
2,864,000
4,980,000
Other expenses
340,000
720,000
Depreciation
18,900
116,960
total operating costs
$ 3,222,900
$ 5,816,960
EBIT
$ 209,100
$ 17,440
Interest expense
62,500
176,000
EBT
$ 146,600
$ (158,560)
Taxes (40%)
58,640
(63,424)
Net income
$ 87,960
$ (95,136)
Other data
20136
20147
Stock price
$ 8.50
$ 6.00
Shares outstanding
100,000
100,000
EPS
$ 0.880
$ (0.951)
DPS
$ 0.220
$ 0.110
|
Assets |
20136 |
|
20147 |
|
Cash |
$ 9,000 |
|
$ 7,282 |
|
Short-term investments. |
48,600 |
|
20,000 |
|
Accounts receivable |
351,200 |
|
632,160 |
|
Inventories |
715,200 |
|
1,287,360 |
|
total current assets |
$ 1,124,000 |
|
$ 1,946,802 |
|
Gross fixed assets |
491,000 |
|
1,202,950 |
|
Less: accumulated depreciation |
146,200 |
|
263,160 |
|
net fixed assets |
$ 344,800 |
|
$ 939,790 |
|
Total assets |
$ 1,468,800 |
|
$ 2,886,592 |
|
|
|
|
|
|
Liabilities and equity |
20136 |
|
20147 |
|
Accounts payable |
$ 145,600 |
|
$ 324,000 |
|
Notes payable |
200,000 |
|
720,000 |
|
Accruals |
136,000 |
|
284,960 |
|
total current liabilities |
$ 481,600 |
|
$ 1,328,960 |
|
Long-term debt |
323,432 |
|
1,000,000 |
|
Common stock (100,000 shares) |
460,000 |
|
460,000 |
|
Retained earnings |
203,768 |
|
97,632 |
|
total equity |
$ 663,768 |
|
$ 557,632 |
|
Total liabilities and equity |
$ 1,468,800 |
|
$ 2,886,592 |
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