beginning esop valuation barry goodman cfa , asa, cpa/abv, cba, cfp
DESCRIPTION
Beginning ESOP Valuation Barry Goodman CFA , ASA, CPA/ABV, CBA, CFP Advanced Valuation Analytics, Ltd. Balance Sheet. Income Statement. Net Sales vs EBITDA. Gradual Increase. Erratic History. Hockey Stick. Effect of Debt on Value. - PowerPoint PPT PresentationTRANSCRIPT
Advanced Valuation Analytics
Beginning ESOP Valuation
Barry GoodmanCFA, ASA, CPA/ABV, CBA, CFP
Advanced Valuation Analytics, Ltd.
Advanced Valuation Analytics
Balance Sheet 2002 2003 2004 2005 2006 2007
Current Assets-
Cash and Equivalents $500,000 $550,000 $600,000 $450,000 $300,000 $125,000
Trade Receivables 4,000,000 4,500,000 5,000,000 5,500,000 4,200,000 3,100,000
Inventory 2,400,000 2,600,000 2,750,000 2,850,000 3,000,000 2,600,000
Other Current Assets 200,000 200,000 200,000 200,000 200,000 200,000
Total Current Assets 7,100,000 7,850,000 8,550,000 9,000,000 7,700,000 6,025,000
Property & Equipment 8,085,885 8,085,885 8,085,885 8,085,885 8,085,885 8,085,885
Other Assets 933,346 933,346 933,346 933,346 933,346 933,346
Total Assets $16,119,231 $16,869,231 $17,569,231 $18,019,231 $16,719,231 $15,044,231
Current Liabilities $3,000,000 $3,500,000 $4,500,000 $6,000,000 $7,000,000 $6,500,000
Long-Term Liabilities 5,000,000 4,500,000 4,000,000 3,500,000 3,500,000 3,500,000
Other Liabilities 0 0 0 0 0 0
Total Liabilities $8,000,000 $8,000,000 $8,500,000 $9,500,000 $10,500,000 $10,000,000
Equity $8,119,231 $8,869,231 $9,069,231 $8,519,231 $6,219,231 $5,044,231
Total Liabilities & Equity $16,119,231 $16,869,231 $17,569,231 $18,019,231 $16,719,231 $15,044,231
Unadjusted Equity $8,119,231 $8,869,231 $9,069,231 $8,519,231 $6,219,231 $5,044,231
Total Adjustments to Equity $0 $0 $0 $0 $0 $0
Advanced Valuation Analytics
Income Statement 2002 2003 2004 2005 2006 2007
Net Sales $30,000,000 $33,000,000 $32,000,000 $30,000,000 $26,500,000 $23,000,000
Cost of Sales 21,500,000 24,500,000 24,000,000 20,000,000 20,000,000 20,000,000
Gross Margin 8,500,000 8,500,000 8,000,000 10,000,000 6,500,000 3,000,000
Operating Expenses 4,900,000 4,950,000 3,600,000 4,000,000 4,500,000 4,300,000
Depreciation 1,100,000 1,350,000 1,900,000 1,900,000 2,000,000 1,900,000
Other- 0 0 0 0 0 0
Operating Profit 2,500,000 2,200,000 2,500,000 4,100,000 0 (3,200,000)
Interest Expense 770,000 930,000 1,050,000 1,030,000 600,000 450,000
Other Income (Loss) 25,000 25,000 25,000 25,000 25,000 25,000
Income Before Taxes 1,755,000 1,295,000 1,475,000 3,095,000 (575,000) (3,625,000)
Income Taxes 737,100 543,900 619,500 1,299,900 (241,500) (1,522,500)
Net Income $1,017,900 $751,100 $855,500 $1,795,100 ($333,500) ($2,102,500)
EBI $1,450,000 $1,276,000 $1,450,000 $2,378,000 $0 ($1,856,000)
EBIT $2,500,000 $2,200,000 $2,500,000 $4,100,000 $0 ($3,200,000)
EBITDA $3,600,000 $3,550,000 $4,400,000 $6,000,000 $2,000,000 ($1,300,000)
Net Income (Unadj) $959,306 $775,000 $865,000 $4,021,100 $926,500 ($3,625,000)
Depreciation/Amort. 1,100,000 1,350,000 1,900,000 1,900,000 2,000,000 1,900,000
Changes Work Cap 908,330 181,816 (293,408) (3,972,523) (807,008) 4,027,840
Investing Act (1,604,564) (7,918,481) (801,652) (785,937) (1,098,795) (1,767,503)
Financing Act (1,967,445) 6,331,404 (2,005,511) (764,264) (1,020,697) (535,337)
Dividends 0 0 0 0 0 0
Cash Flow ($604,373) $719,739 ($335,571) $398,376 $0 $0
Advanced Valuation Analytics
Net Sales vs EBITDA
2002 2003 2004 2005 2006 2007$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
-$2,000,000
-$1,000,000
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Net Sales EBITDA
Ne
t S
ale
s EB
ITD
A
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Gradual Increase
$1,000,000$1,050,000
$1,102,500$1,157,625
$1,215,506$1,276,281
$1,340,095
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
CA
SH
FL
OW
2004 2005 2006 2007 2008 2009 2010 2011 2012
Advanced Valuation Analytics
Erratic History
$2,500,000
$500,000
$25,000
$1,500,000
$2,000,000
$1,000,000
$2,400,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
CA
SH
FL
OW
2004 2005 2006 2007 2008 2009 2010 2011 2012
Advanced Valuation Analytics
Hockey Stick
$1,000,000$1,050,000 $1,102,500 $1,157,625 $1,215,506 $1,276,281
$2,500,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
CA
SH
FL
OW
2004 2005 2006 2007 2008 2009 2010 2011 2012
Advanced Valuation Analytics
Effect of Debt on ValueCompany's EBITDA Capacity $5,000,000Appropriate EBITDA Multiple (MVIC/EBITDA) 5
Market Value of Invested Capital (Enterprise Value) $25,000,000Total Debt 0Equity Value $25,000,000
Market Value of Invested Capital (Enterprise Value) $25,000,000Total Debt 20,000,000Equity Value $5,000,000