Excel Solution to a Mercury Athletic Case Analysis
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Mercury Athletic Footwear - Acquisition Analysis
ACTIVE GEAR COST OF CAPITAL ASSUMPTION
Tax Rate Cost of Debt Risk Free Rate Expected Market Return Market Risk Premium Asset βeta Debt-to-Value Ratio Debt-to-Equity Ratio Equity Beta 40.0% 6.00% 4.93% 10.43% 5.50% 20.0% 25.0% 0.970
CASH FLOW AND OPERATING ASSUMPTIONS
2007 Revenue Men's Athletic Men's Casual Women's Athletic Women's Casual Growth Rates Men's Athletic Men's Casual Women's Athletic Women's Casual Operating Margin Men's Athletic Men's Casual Women's Athletic Women's Casual $ $ $ $ 2,51,957 52,179 1,38,390 36,802 2007 N/A N/A N/A N/A 2007 13.30% 15.99% 10.18% -1.26% 2006 35.0% N/A N/A N/A 1,39,907 35,791 1,04,116 N/A 2008 12.0% 2.0% 11.0% -100.0% 2008 13.30% 15.99% 10.18% 0.00% 2007 40.0% 8,487 9,587 11,983 1,50,293 41,608 1,08,685 4,569
Tax Rate Corporate Overhead Depreciation Capital Expenditures Current Assets Current Liabilities Net Working Capital (CA - CL) ∆ Net Working Capital Post 2011 Growth Rate
$ $ $
$ $ $ $ $ $ $
2.783% Calculated as (NOPAT / Capital) x (Net Reinvestment / NOPAT), or (Net Reinvestm Net Reinvestment in 2011 = Capital in 2011 =
R COST OF CAPITAL ASSUMPTIONS
Cost of Equity Cost of Debt
10.27% 6.00%
BASE CASE NPV (EN VALUE) $4,18,447
8.93200%
Cost of Capital
W AND OPERATING ASSUMPTIONS
2009 10.0% 2.0% 9.0% 0.0% 2009 13.30% 15.99% 10.18% 0.00% 2008 40.0% 8,659 9,781 12,226 1,53,284 41,951 1,11,333 2,648
2010 8.0% 3.0% 7.0% 0.0% 2010 13.30% 15.99% 10.18% 0.00% 2009 40.0% 9,422 10,643 13,303 1,66,798 45,660 1,21,138 9,805
2011 5.0% 3.0% 5.0% 0.0% 2011 13.30% 15.99% 10.18% 0.00% 2010 40.0% 10,098 11,406 14,258 1,78,766 48,941 1,29,825 8,687
Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections
$ $ $ $ $ $ $
$ $ $ $ $ $ $
$ $ $ $ $ $ $
$ $ $ $ $ $ $
2011 40.0%...
ACTIVE GEAR COST OF CAPITAL ASSUMPTION
Tax Rate Cost of Debt Risk Free Rate Expected Market Return Market Risk Premium Asset βeta Debt-to-Value Ratio Debt-to-Equity Ratio Equity Beta 40.0% 6.00% 4.93% 10.43% 5.50% 20.0% 25.0% 0.970
CASH FLOW AND OPERATING ASSUMPTIONS
2007 Revenue Men's Athletic Men's Casual Women's Athletic Women's Casual Growth Rates Men's Athletic Men's Casual Women's Athletic Women's Casual Operating Margin Men's Athletic Men's Casual Women's Athletic Women's Casual $ $ $ $ 2,51,957 52,179 1,38,390 36,802 2007 N/A N/A N/A N/A 2007 13.30% 15.99% 10.18% -1.26% 2006 35.0% N/A N/A N/A 1,39,907 35,791 1,04,116 N/A 2008 12.0% 2.0% 11.0% -100.0% 2008 13.30% 15.99% 10.18% 0.00% 2007 40.0% 8,487 9,587 11,983 1,50,293 41,608 1,08,685 4,569
Tax Rate Corporate Overhead Depreciation Capital Expenditures Current Assets Current Liabilities Net Working Capital (CA - CL) ∆ Net Working Capital Post 2011 Growth Rate
$ $ $
$ $ $ $ $ $ $
2.783% Calculated as (NOPAT / Capital) x (Net Reinvestment / NOPAT), or (Net Reinvestm Net Reinvestment in 2011 = Capital in 2011 =
R COST OF CAPITAL ASSUMPTIONS
Cost of Equity Cost of Debt
10.27% 6.00%
BASE CASE NPV (EN VALUE) $4,18,447
8.93200%
Cost of Capital
W AND OPERATING ASSUMPTIONS
2009 10.0% 2.0% 9.0% 0.0% 2009 13.30% 15.99% 10.18% 0.00% 2008 40.0% 8,659 9,781 12,226 1,53,284 41,951 1,11,333 2,648
2010 8.0% 3.0% 7.0% 0.0% 2010 13.30% 15.99% 10.18% 0.00% 2009 40.0% 9,422 10,643 13,303 1,66,798 45,660 1,21,138 9,805
2011 5.0% 3.0% 5.0% 0.0% 2011 13.30% 15.99% 10.18% 0.00% 2010 40.0% 10,098 11,406 14,258 1,78,766 48,941 1,29,825 8,687
Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections Based on Liedtke's projections
$ $ $ $ $ $ $
$ $ $ $ $ $ $
$ $ $ $ $ $ $
$ $ $ $ $ $ $
2011 40.0%...