Amazon Valuation
Amazon Valuation
data)
I. Income Statement
Current EBIT = $ (410.00)
Current Interest Expense = $ 74.00
Current Capital Spending $ 242.67
Current Depreciation and Amort $ 30.67
Current Revenues = $1,117.00
II. Balance Sheet This period Last period
Current Non-cash Working Capi$ (110.50) $ (31.00)
Book Value of Debt = $ 348.68 76.7
Book Value of Equity = $ 138.00 28.59
Cash & Non-operating assets = $ 25.56 1.88
III. Tax Information
NOL carried forward = $ 500.00
Marginal tax rate = 35.00%
General Information
Current long term government bond rate = 6.50%
Estimated Market Risk Premium = 4.00%
Relative Valuation
If you want to do a relative valuation of your firm, enter these inputs:
Year on which multiple is to be applied = 10
Value to Sales multiple in that year = 1.15
iling 12-month data)
Relative Valuation Output
Year in which multiple is used = 10 Year Revenues Cumulated Cost of Capital
Value to Sales Ratio for Specialty retailers 1.15 1 $ 2,793 112.84%
2 $ 5,585 127.33%
Revenue in chosen year = $ 39,006 3 $ 9,774 143.68%
Value in chosen year = $ 44,857 4 $ 14,661 162.11%
Cost of capital in chosen ye 3.0789 5 $ 19,059 182.87%
Value today = $ 14,569 6 $ 23,862 205.05%
+ Cash & Securities = $ 26 7 $ 28,729 228.88%
- Debt outstanding = $ 349 8 $ 33,211 254.25%
-Equity options outstandin Err:522 9 $ 36,798 280.90%
Value of Equity in stock = Err:522 10 $ 39,006 307.89%
Value per share = Err:522
Cumulated Cost of Capital
Base 1 2 3 4 5 6 7 8 9 10
Revenue Growth Rate 150.00% 100.00% 75.00% 50.00% 30.00% 25.20% 20.40% 15.60% 10.80% 6.00%
Revenues $ 1,117 $ 2,793 $ 5,585 $ 9,774 $ 14,661 $ 19,059 $ 23,862 $ 28,729 $ 33,211 $ 36,798 $ 39,006
Operating Margin -36.71% -13.35% -1.68% 4.16% 7.08% 8.54% 9.27% 9.64% 9.82% 9.91% 9.95%
EBIT -$410 -$373 -$94 $407 $1,038 $1,628 $2,212 $2,768 $3,261 $3,646 $3,883
Taxes $0 $0 $0 $0 $167 $570 $774 $969 $1,141 $1,276 $1,359
EBIT(1-t) -$410 -$373 -$94 $407 $871 $1,058 $1,438 $1,799 $2,119 $2,370 $2,524
+ Depreciation $31 $46 $60 $75 $90 $104 $115 $122 $130 $138 $146
- Capital Expenditure $243 $554 $907 $1,345 $1,572 $1,438 $1,572 $1,599 $1,489 $1,226 $815
- Chg WC -$80 $50 $84 $126 $147 $132 $144 $146 $134 $108 $66
FCFF -$543 -$931 -$1,024 -$989 -$758 -$408 -$163 $177 $625 $1,174 $1,788
NOL $500 $873 $967 $560 $0 $0 $0 $0 $0 $0 $0
Terminal Value
Computed Variables (These are measures of how efficiently your firm is investing over time)
Total Capital Invested $ 486.68 $ 1,045 $ 1,976 $ 3,372 $ 5,001 $ 6,467 $ 8,068 $ 9,691 $ 11,185 $ 12,380 $ 13,116
Reinvestment Rate NMF NMF NMF 343.26% 187.09% 138.57% 116.85% 111.43% 102.38% 84.28% 30.00%
Increase in Revenue/Increase in Cap 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Return on Capital -76.62% -8.96% 20.59% 25.82% 21.16% 22.23% 22.30% 21.87% 21.19% 20.39%
The Valuation
PV of FCFF during high growth phase = $ (1,767)
PV of Terminal Value = $ 16,937
Value of Operating Assets of the firm = $ 15,170
Value of Cash & Non-operating assets= $ 25.56
Value of Firm = $ 15,196
- Value of Outstanding Debt = $ 349
Value of Equity = $ 14,847
- Value of Equity Options = Err:522
Value of Equity in Common Stock = Err:522 Treasury Stock Approach
Value of Equity per share = Err:522 $ 40.54
Terminal Year
6%
$ 41,346
10.00%
$4,135
$1,447
$2,688
$155
$891
$70
$1,881
$0
$52,148
35.00%
15.00%
1.00
10.50%
7.00%
4.55%
9.61%
$ 13,923
30.00%
2.90
20.00%
Operating Lease Converter
Inputs
Operating lease expense in current year = $ 100.00
Operating Lease Commitments (From footnote to financials)
Year Commitment! Year 1 is next year, ….
1 $ 205.00
2 $ 167.00
3 $ 120.00
4 $ 86.00
5 $ 61.00
6 and beyond $ -
Output
Pre-tax Cost of Debt = 8.00% ! If you do not have a cost of debt, use the ratings estimator
Number of years embedded in yr 6 es 0 ! I use the average lease expense over the first five years
to estimate the number of years of expenses in yr 6
Converting Operating Leases into debt
Year CommitmentPresent Value
1 $ 205.00 $ 189.81
2 $ 167.00 $ 143.18
3 $ 120.00 $ 95.26
4 $ 86.00 $ 63.21
5 $ 61.00 $ 41.52
6 and beyon $ - $ - ! Commitment beyond year 6 converted into an annuity for ten years
Debt Value of leases = $ 532.98
Restated Financials
Depreciation on Operating Lease Asset = $ 106.60 ! I use straight line depreciation
Adjustment to Operating Earnings = $42.64 ! PV of operating leases * Pre-tax cost of debt
Adjustment to Total Debt outstanding = $ 532.98
R & D Converter
This spreadsheet converts R&D expenses from operating to capital expenses. It makes the appropriate adjustments to operating income, net
income, the book value of assets and the book value of equity.
Inputs
Over how many years do you want to amortize R&D expenses 10 ! If in doubt, use the lookup table below
The maximum allowed is ten years
Enter R& D expenses for past years: the number of years that you will need to enter will be determined by the amortization period
Do not input numbers in the first column (Year). It will get automatically updated based on the input above.
Year R& D Expenses
-1 1895.00 ! Year -1 is the most recent financial year
-2 1924.00 ! Year -2 is the year before the most recent financial year
-3 1633.00
-4 1300.00
-5 1704.00
-6 1661.00
-7 1846.00
-8 1417.00
-9 827.00
-10 754.00
Output
Year R&D Expense Unamortized portion Amortization this year
-1 1895.00 1.00 1895.00 $ 189.50
-2 1924.00 0.90 1731.60 $ 192.40
-3 1633.00 0.80 1306.40 $ 163.30
-4 1300.00 0.70 910.00 $ 130.00
-5 1704.00 0.60 1022.40 $ 170.40
-6 1661.00 0.50 830.50 $ 166.10
-7 1846.00 0.40 738.40 $ 184.60
-8 1417.00 0.30 425.10 $ 141.70
-9 827.00 0.20 165.40 $ 82.70
-10 754.00 0.10 75.40 $ 75.40
Value of Research Asset = $9,100.20 $1,496.10
Adjustment to Operating Income = $398.90 ! A positive number indicates an increase in operating income (add to reported EBIT)
Tax Effect of R&D Expensing $140
mortization period
Inputs
Over how many years are the benefits of this expense spread? 3
The maximum allowed is ten years
Enter the operating expense (eg. S, G &A) for past years: the number of years that you will need to enter will be determined by the amortiza
Do not input numbers in the first column (Year). It will get automatically updated based on the input above.
Year Operating Expense
-1 1895.00 ! Year -1 is the most recent financial year
-2 1924.00 ! Year -2 is the year before the most recent financial year
-3 1633.00
0 0.00
0 0.00
0 0.00
0 0.00
0 0.00
0 0.00
0 0.00
Output
Year Operating Expense Unamortized portion Amortization this year
-1 1895.00 1.00 1895.00 $ 631.67
-2 1924.00 0.67 1282.67 $ 641.33
-3 1633.00 0.33 544.33 $ 544.33
0 0.00 0.00 0.00 $ -
0 0.00 0.00 0.00 $ -
0 0.00 0.00 0.00 $ -
0 0.00 0.00 0.00 $ -
0 0.00 0.00 0.00 $ -
0 0.00 0.00 0.00 $ -
0 0.00 0.00 0.00 $ -
Value of Asset created by capitalizing $3,722.00 $1,817.33
Adjustment to Operating Income = $77.67 ! A positive number indicates an increase in operating income (add to reported EBIT)
Tax Effect of Expensing $27
e adjustments to operating income, net
d1 = Err:522
N (d1) = Err:522
d2 = Err:522
N (d2) = Err:522