VALUATION METHODS (EXCEL): A STRATEGIC AND FINANCIAL ANALYSIS: THE CASE STUDY OF JUMBO SA
The purpose is to discuss, compare, and apply different theories of corporate valuation in order to assess their equivalence by using as a platform the company Jumbo S.A.
More precisely the following theories will be considered:
◦Free Cash Flow to Equity (“FCFE”)
◦Free Cash Flow to the Firm (“FCFF”)
◦Dividend Discount Model (“DDM”)
◦Economic Profit Model (“EP”)
◦Economic Value Added Model (“EVA”) and
◦Comparable Companies Multiples (“CCM”)
A) The 1st phase is the financial statements forecast. The purpose of this phase is to identify trends in order to forecast value drivers and therefore forecast financial statements for the period 2013 - 2017.
B) Regarding the 2nd phase, the discount rates will be calculated (cost of equity - “CoE” and weighted average cost of capital - “WACC”) which will also take into account the country risk premium related to the exposure of the company when operating in emerging and / or distressed markets.
C) The third phase will consist of using inputs from the financial statements in order to calculate the share price according to the various valuation methods and compare them in terms of share price ranges.