AQ Petroleum is an integrated oil company. The following information is taken from its income statements for 2009 and 2010 (all dollar figures are in millions): 2009 Sales: $12,000; cost of goods sold: 60% of sales, depreciation: $250, CAPEX: $400, additional investment in net working capital: $120 2010 Sales: $13,500, cost of goods sold: 65% of sales, depreciation: $330, CAPEX: $375, additional investment in net working capital: $75 Applicable tax rate for the company is 35%. 1. Calculate company?s free cash flows (FCF) for 2009 and 2010 2. Estimate company?s FCF for 2011-2015 using the following assumptions: 1. Company?s sales will grow at 8% per year over the next five years, 2. cost of goods sold as a percentage of sales is expected to increase by 1% each year, i.e., the gross margin ratio will be decreasing by 1% every year 3. total CAPEX each year is expected to be equal to 25% of additional sales that year (compared to the previous year), 4. increase in net working capital in a given year will be equal to 5% of additional sales that year (compared to the previous year) 5. total depreciation each year will be equal to the total depreciation in a prior year plus 20 % of CAPEX incurred in a prior year (for example, depreciation in 2010 was 250 + 20% x 400 = 330). Since the company is a going concern we need not be concerned about the liquidation value of the firm?s assets at the end of 2015.,I've attached the excel template.
Paper#7161 | Written in 18-Jul-2015Price : $25