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This the spread sheet valuation report for Microsoft Intuit Case.
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TABLE 1: Intuit Corp Balance Sheet
1988 1989
Cash and Equivalents 1,059,000 1,884,000
Accounts Receivable 0 0
Inventory 0 0
Current Asset 741,000 2,228,000
Net Fixed Assets 446,000 1,752,000
Long Term Investments 0 0
Total Assets 2,246,000 5,864,000
945,000 1,894,000
Long Term Debt 0 0
0 0
1,301,000 3,970,000
Total Liabilities and Equity 2,246,000 5,864,000
TABLE 2: Intuit Corp Income Statement
Year 1988 1989
Revenue 6,067,000 18,658,000
Cost of Sales (ex D&A) 2,185,000 6,853,000
General Expenses (ex D&A) 2,465,000 7,513,000
EBITDA 1,417,000 4,292,000
Depreciation and Amortization 0 0
EBIT 1,417,000 4,292,000
Interest Income 150,000 150,000
Long Term Investment Income 0 0
Interest Expense 30000 35000
Income before Taxes 1,537,000 4,407,000
Provision for Income Taxes 580,000 1,693,000
Income after Taxes 957,000 2,714,000
Accounting Changes 0 0
Discontinued Operations 0 0
Extraordinary Items 0 0
Net Income 957,000 2,714,000
TABLE 3: Intuit Historical Financial Ratios
%, except Coverage Ratio
Accounts Payable (Current Liability)
Pension Benefit Obligations
Common Stock Equity (Net worth)
1988 1989
EBITDA/REVENUE 23.36% 23.00%
EBIT/Revenue 23.36% 23.00%
COS (ex D&A) / Revenue 36.01% 36.73%
GE (ex D&A)/ Revenue 40.63% 40.27%
AR/ Revenue 0.00% 0.00%
Inventory/ Revenue 0.00% 0.00%
AP/COS and GE (ex D&A) 20.32% 13.18%
Total Debt/ Total Liabilities and Equity 0.00% 0.00%
Debt/ EBITDA 0.00% 0.00%
CE/Revenue 17.46% 10.10%
CE/TA 47.15% 32.13%
Net fixed Assets/ Revnue 7.35% 9.39%
Depreciation/Prior net fixed assets 0.00%
CAPEX/ Prior net fixed assets 292.83%
Long term Assets/ Total Assets 0.00% 0.00%
Pension/ Total Liabilities and Equity 0.00% 0.00%
Interest income/ CCE 14.16%
Interest rate on debt 0.00%
Return on long term investment 0.00%
Effective tax rate 37.74% 38.42%
Cash ratio % 112.06% 99.47%
Quick Ratio 112.06% 99.47%
Current ratio 190.48% 217.11%
Items ratio 0.00% 0.00%
Coverage ratio 47.23 122.63
TABLE 4: Intuit Corp Historical Growth Rates
Revenue Growth 207.53%
EBITDA Growth 202.89%
EBIT Growth 202.89%
Net Income Growth 183.59%
EBITDA leverage 0.98
EBIT leverage 0.98
Net Income Leverage 0.88
Cash and Equivalents growth 77.90%
Net fixed Assets growth 292.83%
Long term investments growth 0.00%
Debt Growth 0.00%
Equity Growth 205.15%
Total Assets Growth 161.09%
TABLE 5: Operating Cash
Year Revenue
1988 6067000 18%
1989 18658000 18%
1990 33059000 18%
1991 44539000 18%
1992 83793000 18%
1993 121372000 18%
1994 194126000 18%
TABLE 6: Operating Quick Ratio
Year Operating Quick Ratio
1988 48.62%
1989 57.27%
1990 44.64%
1991 41.97%
1992 50.90%
1993 29.61%
1994 14.29%
TABLE 7: Intuit Re-organized Balance Sheet
1988 1989
Operating cash 1092060 3358440
Excess Cash -33060 -1474440
Accounts Receivable 0 0
Inventory 0 0
Current Asset 741,000 2,228,000
Net Fixed Assets 446,000 1,752,000
Long term investments 0 0
Total Assets 2,246,000 5,864,000
945,000 1,894,000
Long term debt 0 0
Pension Benefit 0 0
1,301,000 3,970,000
Total Liabilities and Equity 2,246,000 5,864,000
TABLE 8: Intuit Re-organized Income Statement
1988 1989
Revenue 6,067,000 18,658,000
Cost of Sales (ex D&A) 2,185,000 6,853,000
General Expenses (ex D&A) 2,465,000 7,513,000
EBITDA 1,417,000 4,292,000
Depreciation and Amortization 0 0
EBIT 1,417,000 4,292,000
Interest Income - operating 154683
Interest income - Excess -4683
Interest Income 150,000 150,000
Long term Invenstment Income 0 0
Interest expense 30,000 35,000
Income before taxes 1,537,000 4,407,000
Provision for income tax 580,000 1,693,000
Income after taxes 957,000 2,714,000
Accounting Change 0 0
Discontinued Opeations 0 0
Extraordinary Itesm 0 0
Net Income 957,000 2,714,000
Table 9: Advanced Financial Model of Intuit
1988 1989
Operating Working Capital 147,060 1,464,440
Invested Capital 593,060 3,216,440
Adjusted EBIT 4,446,683
NOPLAT 2738438.14
NOPLAT Margin 14.68%
Capital Efficiency 31.46
ROIC 461.75%
Accounts Payable (Current Liability)
Common stock equity (Net worth)
Core Free Cash Flow 115,058
Opportunity Cost of Invested Capital 15%
Core Economic Profit 2649479
Built up method for Cost oEquity
Treasury Rate Risk Premium Industry
3.20% 5.40% 3.40%
Industry risk: 3.40% for computer sofware based on SBBI Industry Risk Table
Size Risk: The company is not very big as big companies are expected to have no risk, therefore 2% risk is considered for this company
Company Specific Risk: The company is considered to be risky since it's not doing very well in last year and 1% is considered
Finally, a discount rate of 15% is considered for this company.
Table 10: Intuit CFCF/EBITDA
Year
1988
1989
1990
1991
1992
1993
1994
Table 11: Historical Finanical Model of Intuit Corp
1988 19989
Revenue 6,067,000 18,658,000
Revenue Growth 208%
EDBITDA 1,417,000 4,292,000
NOPLAT 2,738,438
NOPLAT Margin 15%
Invested Capital 593,060 3,216,440
Invested Capital growth 442%
Capital Efficeincy 31.46
ROIC 462%
Core Free Cash Flow 115,058
Treasury rate: Based on http://research.stlouisfed.org/fred2/series/BAA?cid=119 is 4.85% for Baa bond. I assume that Intuit is not strong enough to consider the Aaa rate for it but Baa.
Risk Primium for Equity is based on Professor Aswath Damodaran from his website http://research.stlouisfed.org/fred2/series/BAA?cid=119
Opportunity Cost 15%
Core Economic Profit 2,649,479
Net Income 957,000 2,714,000
Table 12: Estimated Return on Invested Capital by Industry
Industry ROIC
Pharmaceuticals and biotechnology 21.80%
Household and personal products 18.80%
Software and software services 18.10%
Media 14.30%
Healthcare Equipment and services 14.80%
Food, Beverage, and tobacco 11.90%
Automobile and components 10.50%
Table 13: Finanical Forecost for Intuit
Previous Yrs Averag 1995
Revenue Growth 85% 75%
NOPLAT Margin 10% 9%
Capital Efficiency Ratio 19.93 10
Opportunity Cost of Invested Capital 12.00%
Revenue 194,126,000 339720500
NOPLAT 30574845
Invested Capital 100,823,680 56053883
Core Free Cash Flow 75344643
Present Value Factor 1 0.892857
Discounted Cash Flow 67272002
Present Value 488,129,674
Core Ecnomic Profit 18476003
Present Value Factor 1 0.892857
Discounted Economic Profit 16496432
Present Value 596,725,882
Valuation Using Core Free Cash Flow
add excess cash 48,943,320
add long term investement 0
Subtract pension obligation 0
Total 48,943,320
Enterprise Value 537,072,994
Current Debt 0
Long term debt 0
Total Debt 0
Equity Value 537,072,994
Valuation Using Economic Profit
Invested Capital 100,823,680
Total Value 697,549,561.87
1990 1991 1992 1993 1994 Assumptions:
3,778,000 7,181,000 9,030,000 39,540,000 83,886,000
0 0 0 0 0
0 0 0 0 0
5,332,000 7,929,000 13,486,000 26,477,000 36,056,000 Assumption: The current asset for 1988, 1989, & 1990 weren't available and are calculated based on 1991 propertion of current asset as an element of total asset
4,221,000 3,990,000 7,118,000 7,770,000 124,640,000 Assumption: The net fixed asset for 1988, 1989, & 1990 weren't available and are calculated based on 1991 propertion of next asset as an element of total asset
0 0 0 0 0
13,331,000 19,100,000 29,634,000 73,787,000 244,582,000
5,751,000 7,160,000 12,289,000 24,543,000 58,759,000 Assumption: There was no data for account payable in the case material, the current liability was treated as account payable.
0 0 0 0 0
0 0 0 0 0
7,580,000 11,940,000 17,345,000 49,244,000 185,823,000
13,331,000 19,100,000 29,634,000 73,787,000 244,582,000
1990 1991 1992 1993 1994
33,059,000 44,539,000 83,793,000 121,372,000 194,126,000
11,951,000 15,535,000 29,085,000 39,160,000 69,499,000
15,612,000 22,623,000 46,854,000 68,981,000 261,273,000
5,496,000 6,381,000 7,854,000 13,231,000 (136,646,000)
0 0 0 0 40,412,000
5,496,000 6,381,000 7,854,000 13,231,000 -177,058,000
164,000 335,000 354000 624000 2507000 Assumption: The interest income for 1988 and 1989 are assumed based on 1990
0 0 0 0 0
39000 65000 66000 100000 10000 Assumption: The interest expensefor 1988 and 1989 are assumed based on 1990
5,621,000 6,651,000 8,142,000 13,755,000 -174,561,000
2,062,000 2,353,000 2,866,000 5,344,000 1,752,000
3,559,000 4,298,000 5,276,000 8,411,000 -176,313,000
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
3,559,000 4,298,000 5,276,000 8,411,000 -176,313,000
1990 1991 1992 1993 1994
16.62% 14.33% 9.37% 10.90% -70.39%
16.62% 14.33% 9.37% 10.90% -91.21%
36.15% 34.88% 34.71% 32.26% 35.80%
47.22% 50.79% 55.92% 56.83% 134.59%
0.00% 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
20.86% 18.76% 16.18% 22.70% 17.76%
0.00% 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
11.43% 16.12% 10.78% 32.58% 43.21%
28.34% 37.60% 30.47% 53.59% 34.30%
12.77% 8.96% 8.49% 6.40% 64.21%
0.00% 0.00% 0.00% 0.00% 520.10%
140.92% -5.47% 78.40% 9.16% 2024.22%
0.00% 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
8.70% 8.87% 4.93% 6.91% 6.34%
0.00% 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
36.68% 35.38% 35.20% 38.85% -1.00%
65.69% 100.29% 73.48% 161.10% 142.76%
65.69% 100.29% 73.48% 161.10% 142.76%
158.41% 211.03% 183.22% 268.99% 204.13%
0.00% 0.00% 0.00% 0.00% 0.00%
140.92 98.17 119 132.31 -13664.6
77.18% 34.73% 88.13% 44.85% 59.94%
28.05% 16.10% 23.08% 68.46% -1132.77%
28.05% 16.10% 23.08% 68.46% -1438.21%
31.13% 20.76% 22.75% 59.42% -2196.22%
0.36 0.46 0.26 1.53 -18.90
0.36 0.46 0.26 1.53 -23.99
0.40 0.60 0.26 1.32 -36.64
100.53% 90.07% 25.75% 337.87% 112.15%
140.92% -5.47% 78.40% 9.16% 1504.12%
0.00% 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
90.93% 57.52% 45.27% 183.91% 277.35%
127.34% 43.28% 55.15% 148.99% 231.47%
Operating cash
1092060
3358440
5950620
8017020
15082740
21846960
34942680
1990 1991 1992 1993 1994
5950620 8017020 15082740 21846960 34942680
-2172620 -836020 -6052740 17693040 48943320
0 0 0 0 0
0 0 0 0 0
5,332,000 7,929,000 13,486,000 26,477,000 36,056,000
4,221,000 3,990,000 7,118,000 7,770,000 124,640,000
0 0 0 0 0
13,331,000 19,100,000 29,634,000 73,787,000 244,582,000
5,751,000 7,160,000 12,289,000 24,543,000 58,759,000
0 0 0 0 0
0 0 0 0 0
7,580,000 11,940,000 17,345,000 49,244,000 185,823,000
13,331,000 19,100,000 29,634,000 73,787,000 244,582,000
1990 1991 1992 1993 1994
33,059,000 44,539,000 83,793,000 121,372,000 194,126,000
11,951,000 15,535,000 29,085,000 39,160,000 69,499,000
15,612,000 22,623,000 46,854,000 68,981,000 261,273,000
5,496,000 6,381,000 7,854,000 13,231,000 (136,646,000)
0 0 0 0 40,412,000
5,496,000 6,381,000 7,854,000 13,231,000 -177,058,000
292348 527649 395213 1042262 1385188
-128348 -192649 -41213 -418262 1121812
164,000 335,000 354,000 624,000 2,507,000
0 0 0 0 0
39,000 65,000 66,000 100,000 10,000
5,621,000 6,651,000 8,142,000 13,755,000 -174,561,000
2,062,000 2,353,000 2,866,000 5,344,000 1,752,000
3,559,000 4,298,000 5,276,000 8,411,000 -176,313,000
0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
3,559,000 4,298,000 5,276,000 8,411,000 -176,313,000
1990 1991 1992 1993 1994
199,620 857,020 2,793,740 -2,696,040 -23,816,320
4,420,620 4,847,020 9,911,740 5,073,960 100,823,680
5,788,348 6,908,649 8,249,213 14,273,262 -175,672,812
3664958.46 4464497.54 5345473.86 8727910.60 -177435970.94
11.09% 10.02% 6.38% 7.19% -91.40%
10.28 10.08 17.29 12.25 38.26
113.94% 100.99% 110.28% 88.06% -3496.99%
2,460,778 4,038,098 280,754 13,565,691 -273,185,691
15% 15% 15% 15% 15%
3182492 3801405 4618421 7241150 -178197065
Size Company Specific Total
2.00% 1% 15.00%
Size Risk: The company is not very big as big companies are expected to have no risk, therefore 2% risk is considered for this company
Company Specific Risk: The company is considered to be risky since it's not doing very well in last year and 1% is considered
Ratio
0.0%
2.7%
44.8%
63.3%
3.6%
102.5%
199.9%
1990 1991 1992 1993 1994
33,059,000 44,539,000 83,793,000 121,372,000 194,126,000
77% 35% 88% 45% 60%
5,496,000 6,381,000 7,854,000 13,231,000 -136,646,000
3,664,958 4,464,498 5,345,474 8,727,911 -177,435,971
11% 10% 6% 7% -91%
4,420,620 4,847,020 9,911,740 5,073,960 100,823,680
37% 10% 104% -49% 1887%
10.28 10.08 17.29 12.25 38.26
114% 101% 110% 88% -3497%
2,460,778 4,038,098 280,754 13,565,691 -273,185,691
http://research.stlouisfed.org/fred2/series/BAA?cid=119 is 4.85% for Baa bond. I assume that Intuit is not strong enough to consider the Aaa rate for it but Baa.
Risk Primium for Equity is based on Professor Aswath Damodaran from his website http://research.stlouisfed.org/fred2/series/BAA?cid=119
15% 15% 15% 15% 15%
3,182,492 3,801,405 4,618,421 7,241,150 -178,197,065
3,559,000 4,298,000 5,276,000 8,411,000 -176,313,000
1996 1997 1998 1999 2000 2001
65% 60% 50% 40% 30% 25%
9% 9% 9% 8% 8% 8%
10 10 10 9 9 9
12.00% 12.00% 12.00% 12.00% 12.00% 12.00%
560538825 896862120 1345293180 1883410452 2448433588 3060541985
50448494 80717591 121076386 150672836 195874687 244843359
89686212 134529318 209267828 272048176 340060221 408072265
16816165 35874485 46337876 87892488 127862643 176831315
0.797194 0.711780 0.635518 0.567427 0.506631 0.452349
13405744 25534750 29448558 49872558 64779194 79989506
43722028 69955245 104932868 125560697 163228906 204036132
0.797194 0.711780 0.635518 0.567427 0.506631 0.452349
34854933 49792762 66686735 71246511 82696844 92295584
Assumptions:
Assumption: The current asset for 1988, 1989, & 1990 weren't available and are calculated based on 1991 propertion of current asset as an element of total asset
Assumption: The net fixed asset for 1988, 1989, & 1990 weren't available and are calculated based on 1991 propertion of next asset as an element of total asset
Assumption: There was no data for account payable in the case material, the current liability was treated as account payable.
Assumption: The interest income for 1988 and 1989 are assumed based on 1990
Assumption: The interest expensefor 1988 and 1989 are assumed based on 1990
2002 2003 2004
20% 15% 10%
8% 7% 7%
9 8 8
12.00% 12.00% 12.00%
3672650381 4223547939 4645902732
293812031 295648356
527943492 580737842
173940803 242854006
0.403883 0.360610
70251773 87575589
244843359 232295137
0.403883 0.360610
98888126 83767955
Assumption: The current asset for 1988, 1989, & 1990 weren't available and are calculated based on 1991 propertion of current asset as an element of total asset
Assumption: The net fixed asset for 1988, 1989, & 1990 weren't available and are calculated based on 1991 propertion of next asset as an element of total asset
Assumption: There was no data for account payable in the case material, the current liability was treated as account payable.
