Tottenham

In: Business and Management

Submitted By takzeh
Words 5003
Pages 21
BASE CASE
ASSUMPTIONS MADE
• In order to discount the free cash flow to firm (FCFF), the following formula was used: o = ∗ 1 − + − − ∆

• In order to find WACC, the following assumptions were also made for the CAPM: o Market Risk Premium = FTSE CAGR 2002-2007 - fixed risk-free (given) = 4.68% o Debt costs = Interest payment / long-term debt = 5.25%

• Equity ratio = market cap / total value = 128m/182m
• Debt ratio = Market value debt / total = Exhibit 2 figures (not Balance Sheet)
• Net debt for all different scenarios was assumed to be the value from t=0
• NWC = Current assets07 – current liabilities07 – excess cash07 (Working Capital Turnover Ratio: 58% of sales)1 was kept constant • Terminal Value =

2020


discounted from 2019

• Pos. NPV = GBP 188.43m
• As shown on the next slide, the stock at its current pricing of GBP 13.8 is undervalued according to the DCF – it should be
GBP 18.27 or GBP 17.29 depending on which net debt is used o Since the Net debt/EV ratio shown in Exh. 2 does not match the EV calculated from the balance sheet figures, both results are shown at the bottom
1

As calculated in Berk & DeMarzo. (2013). “Corporate Finance”
EV appx. GBP 195m http://www.transfermarkt.de/tottenham-hotspur/startseite/verein/148, calculated with FX rate.
Accessed 2016-04-02
2 Official

1

BASE CASE
188.43

Current

Forecast

0
2007

Revenue

1
2008

2
2009

3
2010

4
2011

5
2012

6
2013

7
2014

8
2015

9
2016

10
2017

11
2018

12
2019

13
2020

74.10

80.77

88.04

95.96

104.60

114.01

124.27

135.46

147.65

160.94

175.42

191.21

208.42

216.76

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

4.00%

3.56

4.38

5.26

6.20

7.21

8.27

9.41

10.60

11.86…...

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