EXCEL-SKILLS.

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EXCEL-SKILLS.COM
BUSINESS VALUATION TEMPLATE
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Excel Skills | Business Valuation Template
Instructions
www.excel-skills.com

This template enables business owners and buyers or sellers of businesses to calculate an estimated valuation of a
business or company based on the discounted cash flow (DCF) method by using the weighted average cost of capital
(WACC) as a discount rate for future cash flow projections over three and five year periods. The estimated business
valuations are calculated by using the net present value (NPV) method with the option of including a terminal value. The
flexible design of the template also enables users to perform sensitivities on the projected cash flow and financing of a
business in order to evaluate what the business is worth. On
Onthis
thissheet:
sheet:
This
This sheet
sheet includes
includes detailed
detailed instructions
instructions
Note: A formal valuation of a business usually involves a comprehensive analysis of the cash flow generated by the
business and the inherent risk factors which may affect a business valuation. We believe that it is impossible to compile a on
on setting
setting up
up and
and using
using this
this template.
template.
formal, independent business valuation by using any stand alone business valuation tool and the results produced by this
template should therefore not be interpreted as a formal business valuation. This template is a unique business valuation
solution which adds immeasurable value in determining and analysing the estimated value of a business on a discounted
cash flow basis.

The following sheets are included in this template:

Assumptions - this sheet contains all the user assumptions which affect the business valuation calculations. Most of the
assumptions are used in compiling the 5-year forecast of annual cash flows but some important financing assumptions are
also included at the bottom of the sheet.
CashFlow - the 5 year annual cash flow forecast on this sheet is automatically compiled from the assumptions entered on
the Assumptions sheet. The only user input which is required on this sheet is the addition of expense items if the default
expenses are not sufficient.
Valuation - the annual cash flow projections and the financing assumptions set at the bottom of the Assumptions sheet
are used in the calculation of the estimated business valuations on this sheet. The template uses the discounted cash flow
(DCF) business valuation method with the weighted average cost of capital (WACC) as the discount rate to calculate
estimated business valuations based on the net present value (NPV) of future cash flows and a terminal value if
applicable.

Assumptions

Business Name

The business name entered in cell B4 on the Assumptions sheet is used as a heading on all sheets.

Turnover

The turnover amounts in the annual cash flow projections are calculated from the year 1 amount entered in cell C9 on the
Assumptions sheet and increased for subsequent years by applying the appropriate annual increase percentages specified
in row 10 on the Assumptions sheet to the appropriate previous year's turnover amount.

Gross Profit %

The estimated gross profit percentages entered in row 12 on the Assumptions sheet are used to calculate the appropriate
gross profit amounts in each year on the cash flow projections. The cost of sales amounts are then calculated by deducting
the gross profit amounts from the appropriate turnover amounts.

Note: Gross profit percentages of 100% can be entered to compile a cash flow forecast for service based businesses. The
turnover amounts will then be the same as the gross profit amounts and you can hide the cost of sales and gross profit
rows on the CashFlow sheet if you don't want to include these calculations on the annual cash flow projections.

Expenses

The template includes 23 default expense items which can be customized based on requirements. The default expense
item descriptions can be edited in order to change the appropriate expense items and you can sort the expense item
descriptions on the Assumptions sheet in alphabetical order after customizing the default list. The expense item
descriptions and amounts on the cash flow forecast are automatically updated.

You can also add additional expense items to the default list by simply inserting a row anywhere above the "Add new
expense items above this row" text in row 37. The expense items which are added above this row are automatically
updated on the CashFlow sheet but you also need to insert the appropriate number of additional rows on this sheet in
order to include all the expenses listed on the Assumptions sheet on the cash flow forecast.

The year 1 expense amounts in column C on the Assumptions sheet are automatically included in the appropriate rows on
the CashFlow sheet. The year 2 to year 5 expense amounts are calculated by applying the expense increase percentages
which are entered in row 38 to the appropriate expense amounts of the previous year.

Individual expense items are not covered in these instructions because the nature of expenses differs based on the nature
of the business for which the cash flow forecast is compiled. We would however like to emphasize that users need to
ensure that all expenses are included in the cash flow forecast because the omission of material expenses could result in
an inaccurate business valuation being arrived at.

Some expense items do however require special mention for the purpose of this template. If you are calculating a business
valuation for a start-up business, some costs may be incurred in the first year but not in subsequent years. These start-up
costs should be included in the list of expense items on the Assumptions sheet but the formulas which are used in order to
calculate the expenses for subsequent years on the CashFlow sheet should be deleted and replaced by nil values.

The salaries & wages expense as well as expenses of a personal nature which have been included in owner managed
businesses should also be carefully considered. For business valuation purposes, it is important that all expenses are
market related and do not include or otherwise represent profit distribution to owners. If you want to calculate the funds
which will be available for distribution to owners or shareholders, you should calculate this separately and not include
these values in the cash flow forecast calculations.

Note: Non-cash expense items like depreciation on property, plant & equipment should not be included in the cash flow
projections simply because these items are accounting entries and not related to the cash generated by a business.

Working Capital

Page 3 of 10
Excel Skills | Business Valuation Template
Instructions
www.excel-skills.com

The working capital of a business consists of inventory, debtors and creditors balances. The movements in these balances
form part of the operating cash flow of a business and are therefore included in the calculation of our annual cash flow
projections. In order to calculate the movements in working capital, users therefore need to enter the estimated start-up
balances (for existing businesses) and annual closing balances for each of the working capital account groups (inventory,
debtors and creditors). Note that the estimated closing creditor balances need to be entered as negative values.

When this template is used to calculate an estimated business valuation for an existing business or a business which is
acquired as a going concern, the start-up working capital balances should be easy to determine (based on the business
accounts or acquisition agreement). If the template is however used to calculate a company valuation without any previous
trading history, the start-up balances should be nil and the closing working capital balances for each projection year should
be estimated.

We recommend applying an estimated "days" factor to the appropriate income statement items in order to calculate an
accurate estimate of the appropriate working capital closing balances. For example, the closing inventory balance for each
year can be calculated by dividing the cost of sales amount of the appropriate year by 365 and multiplying the result by the
estimated days of inventory kept on hand.

Similarly, debtors closing balances can be calculated by dividing the turnover amount of the appropriate year by 365 and
multiplying the result by the number of days' sales expected to be outstanding at the end of each year. Debtor trading
terms and the ratio of cash and credit sales should also be considered in determining this estimate.

The outstanding creditors balances can also be calculated based on a number of days assumption but users should keep
in mind that this balance is influenced by inventory purchases as well as expense items and the ratio of cash and credit
payments. The trading terms negotiated with suppliers can therefore be used in calculating the estimate but the extent of
expense line items paid on a cash basis should also be taken into account.

Note: We have included working capital days calculations at the bottom of the CashFlow sheet so that you can determine
whether your assumptions of the individual annual working capital balances on the Assumptions sheet are accurate and
consistent over all annual cash projection periods.

Capital Expenditure

All the forecasted acquisitions of property, plant & equipment (fixed assets) which do not form part of the initial business
acquisition should be entered in row 44 on the Assumptions sheet. It is also important to note that you should only include
fixed assets with a useful life of more than one year in capital expenditure. Assets with a useful life of less than a year
should be included in the Expenses section.

All capital expenditure amounts should be entered as positive values - the amounts are automatically converted to
negative values (cash outflows) on the CashFlow sheet. Note that it is the amounts which are forecasted to be spent in
each year that should be included in the assumptions and not the closing balance of all fixed assets.

As we've mentioned before, depreciation should not be included as an expense item for the purpose of this template
because it is not a cash expense. We do however recommend that the deterioration of the condition of fixed assets is
considered when estimating the capital expenditure amounts, especially in years 4 and 5.

Acquisition Price & Financing

This section at the bottom of the Assumptions sheet contains a number of important assumptions which need to be
specified in order to calculate accurate business valuations.

Cost of Capital

Enter the debt finance percentage in cell B53 and the cost of debt in cell B54. The debt finance percentage determines the
level of debt which will be used to finance the business acquisition. This together with the cost of debt which is equal to the
annual loan interest rate affects the calculation of the weighted average cost of capital (WACC) which is used as the
discount rate for determining the present value of future cash flow projections and therefore the value of the business.

The template uses debt and equity as the sources of finance in calculating a business valuation. Equity makes up the
remaining part of the funds which are required to purchase the business which is being valued and the debt finance plus
the equity finance will always equal 100%. The ratio between debt and equity is important as the cost of debt is usually
lower than the cost of equity and the debt equity percentage therefore has an effect on business valuations as it affects the
weighted average cost of capital which is used as the discount rate.

If the cost of debt and the cost of equity are the same, the debt capital percentage would not influence the valuation
calculations. If a business is therefore financed 100% through debt or the contributors of equity only require a return which
is equal to the annual loan interest rate (cost of debt), the debt equity percentage will have no effect on the business
valuation. This is however rarely the case as equity contributors usually require a higher return than the loan interest rate
due to a higher risk which is associated with equity contributions.
The equity finance percentage in cell B55 is calculated based on the debt finance percentage entered in cell B53. The
required return on equity (before taxation) should be entered in cell B56 and is effectively the cost of equity - this means
that it is the required annual return on the capital invested to acquire the business which needs to be paid to the equity
contributors.

The WACC is used as the discount rate of future cash flows and the general principle is that the higher the WACC, the
lower the business valuation. This is because paying higher returns on equity or debt would require more cash which
leaves less available to grow the business. Cost of debt is basically the same as the annual interest rate which does not
usually differ by much between credit providers but the required return on equity is a lot more subjective as some investors
may require a higher return than others on the equity capital that they contribute.

Note: This is especially important when buying a business as business valuation calculations need to be performed
specifically based on the required return of equity contributors to determine whether paying these returns would be
feasible. For sellers of businesses, using a scenario with 100% debt finance and using the cost of debt as a starting point
removes some of the subjectiveness of business valuation calculations and usually results in a higher business valuation
being calculated.

Profit Multiple

Page 4 of 10
Excel Skills | Business Valuation Template
Instructions
www.excel-skills.com

A profit multiple can be entered in cell B52 and is used to calculate the estimated business valuation in cell H7 on the
Valuation sheet. This calculation has been included as it is sometimes used to arrive at an estimated value quickly without
having to crunch a lot of numbers. The calculation basically uses an industry profit multiple and multiplies the annual
earnings before interest, taxation, depreciation and amortization (EBITDA) by this value to arrive at a business or company
valuation.
You therefore need to do some research to determine what a suitable profit multiple for your industry would be and enter
this value in cell B52. We do not however recommend using only this valuation technique when calculating business
values as it does not include as much detail as the discounted cash flow calculations which are considered to be a lot more
accurate.

Terminal Value

The template accommodates the inclusion of a terminal value in the calculation of an estimated business valuation. A
terminal value basically provides for the inclusion of cash flows after the 5-year cash flow projection period in the company
valuation and the inclusion of a terminal value should therefore only really be considered where there is an established
trading history spanning a number of years, where the risk associated with the acquisition of the business is low and where
the expected benefits from the cash flows of the business are certain to be derived for a period far exceeding the 5-year
annual cash flow forecast period.

The calculation of the terminal value basically adds a specified annual net cash growth rate to the year 5 net annual cash
flow and divides this value by the difference between the WACC and the specified annual cash growth rate. The cash flow
growth rate which is used in the calculation can be specified in cell B51 on the Assumptions sheet and you can also enter
a nil value in this cell to assume a zero growth rate as a more conservative valuation basis.

Note: The above calculation approach basically includes future cash flows in perpetuity in the business valuation
calculation which may not always be suitable because buyers of small to medium enterprises which have a reasonably
high rate of failure and therefore a higher risk associated with acquiring or investing in them tend to require a much shorter
period for making their money back in order for it to be worthwhile investing in such business acquisitions. Terminal values
should therefore only be used in cases where there is a lower level of risk due to established profit history and relatively
low uncertainty with regards to the consistency of future cash flows.
The terminal value calculation can be activated by simply selecting the Yes option from the list box in cell B50 on the
Assumptions sheet. The calculated value is then automatically included in the valuation calculations on the Valuation
sheet.

Setting a Business Value

The business valuation calculations in this template are automated but you can also use the template to evaluate a
specified business value. If you want to evaluate a specified business value, you can select the Yes option from cell B48
and enter the appropriate value in cell B49 (which will change to a yellow input cell when you select the Yes option).

The net present value (NPV) and internal rate of return (IRR) calculation methodologies are then used to evaluate the
business value specified and the calculation results are displayed in the section below the estimated business valuation
calculations at the top of the Valuation sheet.

The IRR displays the cumulative annual investment return which is achieved based on the annual cash flows and with the
specified business value as an initial capital outlay for acquiring the business. The NPV calculations display whether the
cash flows are in excess of what is required at a discount rate equal to the WACC. A positive value basically means that
the return on investment is in excess of the WACC while a negative value indicates that the investment return is lower than
the WACC.

Note: The IRR and NPV calculations are displayed for both the business valuations calculated over five years and the
business valuation calculated over three years. It is therefore important to consider the calculations over both periods.

Annual Cash Flow

The annual cash flow projections on the CashFlow sheet are automatically compiled from the input values entered on the
Assumptions sheet. The calculations of the line items included on the cash flow projections are covered under the
Assumptions section of these instructions. The only user input which is required on the CashFlow sheet is the addition of
expense items (if additional expenses have been added to the Assumptions sheet).

If additional expense items have been added on the Assumptions sheet, you may notice that not all the expense items are
included in the cash flow projections. The additional expenses have to be added to the cash flow projections by inserting
the appropriate number of additional rows anywhere between the existing expense rows and copying the formulas in
column A to G from one of the existing rows. Note that the descriptions of the expense items below the empty rows will
change after inserting the new rows but all the appropriate descriptions are included after copying the formulas.

The order in which expense items are displayed on the CashFlow sheet is exactly the same as the order in which expense
items are included on the Assumptions sheet. If you therefore delete some of the expenses from the list on the
Assumptions sheet, there will be too many expense items included on the CashFlow sheet but all the descriptions of all of
the excess items will automatically change to "Delete this row!" which makes it easy to know which excess items to delete.

Note: We have also added conditional formatting in the cell containing the total expenses label so that this cell will be
highlighted in red if the number of expenses on the Assumptions sheet does not match the number of expenses on the
CashFlow sheet. If you therefore see the red highlighting, you should compare the expense items between the two sheets.

Note: The cash outflow relating to the repayment of loans is not included on the cash flow forecast because it is included in
the calculation of the weighted average cost of capital (WACC) which is used as the discount rate in calculating the NPV
and estimated business valuation.

Note: The working capital days calculations at the bottom of the CashFlow sheet have been included to make it easier to
determine whether the inventory, debtors and creditors balances on the Assumptions sheet are accurate. You can
therefore review these days calculations to determine whether these working capital balances are accurate and consistent
between annual cash flow calculation periods.

Business Valuation Calculations

Page 5 of 10
Excel Skills | Business Valuation Template
Instructions
www.excel-skills.com

The Valuation sheet contains a business valuation section, an annual cash flow chart and a cash flow calculation highlights
section. All the calculations on this sheet are automated based on the assumptions entered on the Assumptions sheet and
the cash flow projections on the CashFlow sheet. No user input is required on the Valuation sheet. The print range is
limited to the business valuation dashboard section and the dashboard data section below it is not printed.

Discounted Cash Flow, WACC and Profit Multiple

The business valuation section at the top of the sheet contains business valuation calculations based on discounted cash
flow over a 3-year and 5-year period, a calculation of the weighted average cost of capital which is used as the discount
rate in the discounted cash flow calculations and a business valuation calculation based on a profit multiple.

The discounted cash flow calculations are based on the annual cash flow calculations on the CashFlow sheet and uses the
NPV calculation method with the WACC as discount rate to discount the future cash flows to their present value which in
effect represents the value of the business. If the terminal value option is activated on the Assumptions sheet, the terminal
value is calculated and included at the end of the forecast period and then also discounted by the WACC to its present
value.

The section below the 3-year and 5-year discounted cash flow calculations splits the calculated business valuation into the
debt and equity portions. This gives the user an indication of the level of debt and equity which is required to be invested
should the business be purchased at the calculated valuation.

If the user elects to specify a business value by selecting the Yes option on the Assumptions sheet, the set value will be
analysed below the calculated business valuations for 3 years and 5 years and the net present value (NPV) and the
internal rate of return (IRR) will be displayed in these sections below the debt finance amounts.

A positive NPV indicates that the investment return exceeds the weighted average cost of capital and a negative NPV
indicates that the investment return is below the WACC. The IRR reflects the average annual investment return if the set
value is included as the initial capital outlay in the calculation. The IRR is basically the discount rate which would result in a
zero (break-even) net present value and the difference between the IRR and WACC basically represents the value
difference in the NPV when setting the specified value as the selling price of a business or acquisition price of a business.

Note: The IRR calculation is only displayed if the set value option is activated and there is no terminal value. If the user
elects to include a terminal value in the company valuation calculation, the terminal value will be included in the dashboard
instead of the IRR. The IRR calculation can however still be seen in the dashboard data section of the sheet.

The weighted average cost of capital (WACC) calculation is also included at the top of the business valuation dashboard
and calculated based on the debt finance percentage, cost of debt (annual loan interest rate) and the cost of equity. All of
these variables have been covered in more detail in the Assumptions section of these instructions.

Note: The WACC is used as the discount rate in the discounted cash flow calculations and there is an inverse relationship
between the WACC and the calculated business value. This means that the higher the WACC, the lower the business
valuation and vice versa which should make sense as an increase in the loan interest rate would result in higher loan
repayments and therefore a lower value of a business servicing the loan repayments as a result of less cash available for
shareholders.

The template also makes provision for the calculation of a business valuation based on a profit multiplier. These types of
business valuation calculations are usually based on earnings before interest, taxation, depreciation and amortization
(EBITDA) and we have therefore linked the calculation to the year 1 profit before interest and tax (PBIT) on the CashFlow
sheet. Our expenses section does not include depreciation or amortization and the PBIT is therefore the same as the
EBITDA.

The profit multiple which is used in the calculation can be set on the Assumptions sheet and should be based on the
appropriate industry standard for your business and country. Users may need to research this online or stick to our default
profit multiple. Please just note that this method of calculating a business valuation is a lot less accurate than calculations
which are based on discounted cash flow and the 3-year and 5-year discounted cash flow business valuation calculations
should therefore carry more weight than the valuation based on the profit multiplier.

Annual Cash Flow Chart

The 5-year cash flow projections calculated on the CashFlow sheet are included in an annual free cash flow chart on the
Valuation sheet. These are the same free cash flow amounts which are used in the net present value function to calculate
the company valuations or business valuations based on the discounted cash flow business valuation method.

Cash Flow Calculation Highlights

We have included this section in the business valuation dashboard to provide a one-page summary not only of the
business value or company value calculated but also of some of the assumptions which were made in compiling the future
cash flow projections on which the discounted cash flow calculations were based.

Dashboard Data Section (Not Printed)

The dashboard data section below the dashboard on the Valuation sheet contains some of the data on which the business
valuation calculations are based. The section is for information purposes only and the default page setup excludes the
cells from the printed area of the Valuations sheet.

Help & Customization

If you experience any difficulty while using this template and you are not able to find the appropriate guidance in these
instructions, please e-mail us at [email protected] for assistance. This template has been designed with flexibility
in mind to ensure that it can be used in most business environments. If however you need an Excel based template that is
customized specifically for your business requirements, please e-mail our Support function and provide a brief explanation
of your requirements.

© Copyright

Page 6 of 10
Excel Skills | Business Valuation Template
Instructions
www.excel-skills.com

This template remains the intellectual property of www.excel-skills.com and is protected by international copyright laws.
Any publication or distribution of this template outside the scope of the permitted use of the template is expressly
prohibited. In terms of the permitted use of this template, only the distribution of the template to persons within the same
organisation as the registered user or persons outside the organisation who can reasonably be expected to require access
to the template as a direct result of the use of the template by the registered user is allowed. Subsequent distribution of the
template by parties outside of the organisation is however expressly prohibited and represents an infringement of
international copyright laws.

Page 7 of 10
Example Company (Pty) Limited
Valuation Assumptions

Business Name / Sheet Heading Example Company (Pty) Limited

Financial Assumptions - Cash Flow Calculations

Start-up Year 1 Year 2 Year 3 Year 4 Year 5
Turnover
Estimated Annual Turnover 5,000,000
Annual Increase % 10.0% 10.0% 5.0% 5.0%
Gross Profit %
Estimated Gross Profit % 35.0% 35.0% 35.0% 38.0% 38.0%
Expenses 23
Accounting Fees 24,000
Advertising & Marketing 60,000 On
Onthis
thissheet:
sheet:
Bank Charges 3,000
The
The assumptions
assumptions onon this
this sheet
sheet are
are used
used to
to automatically
automatically compile
compile the
the five
five year
year cash
cash flow
flow projections
projections onon the
the CashFlow
CashFlow
sheet
sheet and
and the
the business
business valuation
valuation calculations
calculations onon the
the Valuation
Valuation sheet.
sheet. The
The turnover,
turnover, gross
gross profit
profit percentages,
percentages, expenses,
expenses,
Cleaning Expenses 6,000
working
working capital
capital balances
balances and
and capital
capital expenditure
expenditure amounts
amounts are are included
included inin the
the cash
cash flow
flow projections.
projections. Note
Note that
that you
you can
can
Computer Expenses 4,000
add
add additional
additional expense
expense items
items ifif required.
required. The
The assumptions
assumptions in in the
the Acquisition
Acquisition Price
Price & & Financing
Financing section
section are
are used
used toto
Consumables 15,000
calculate
calculate the
the WACC
WACC which
which isis used
used as
as the
the discount
discount rate
rate for
for discounted
discounted cash
cash flow
flow calculation
calculation purposes.
purposes. You
You can
can also
also set
set aa
Electricity & Water 12,000
business
business value
value toto evaluate
evaluate itit against
against your
your cash
cash flow
flow projections,
projections, elect
elect to
to include
include aa terminal
terminal value
value and
and set
set aa profit
profit
Entertainment 8,000 multiplier
multiplier for
for an
an alternative
alternative business
business valuation
valuation method.
method.
Equipment Hire 6,000
Insurance 10,000
Legal Fees 4,500
Motor Vehicle Expenses 36,000
Postage 2,000
Printing & Stationery 5,500
Professional Fees 17,000
Rent 120,000
Repairs & Maintenance 11,000
Salaries & Wages 600,000
Security 13,000
Subscriptions 5,800
Telephone & Fax 28,000
Training 18,000
Uniforms 5,000
Add new expense items above this row
Annual Increase % 6.0% 6.0% 5.0% 5.0%
Working Capital
Inventory 175,000 190,000 206,000 225,000 230,000 235,000
Debtors 350,000 410,000 452,000 497,000 522,000 548,000
Creditors (150,000) (163,000) (178,000) (194,000) (197,000) (207,000)
Capital Expenditure
Annual Capital Expenses 60,000 60,000 100,000 200,000 200,000

Financial Assumptions - Acquisition Price & Financing

Do you want to set the acquisition price? No

Business Acquisition Price -
Include Terminal Value No
Cash Flow Growth Rate - After Year 5 0.0%
Profit Multiple 2.5
Debt Finance % 60.0%
Cost of Debt (annual loan interest rate) 10.0%
Equity Finance % 40.0%
Required Return on Equity (before taxation) 20.0%

Page 8 of 10
Example Company (Pty) Limited
Cash Flow Projection
© www.excel-skills.com
Monthly
Year 1 Year 2 Year 3 Year 4 Year 5
Average
Turnover 416,667 5,000,000 5,500,000 6,050,000 6,352,500 6,670,125

Cost of Sales 270,833 3,250,000 3,575,000 3,932,500 3,938,550 4,135,478

Gross Profit 145,833 1,750,000 1,925,000 2,117,500 2,413,950 2,534,648

Gross Profit % 35.0% 35.0% 35.0% 35.0% 38.0% 38.0%

Expenses
Accounting Fees 2,000 24,000 25,440 26,966 28,315 29,730
Advertising & Marketing 5,000 60,000 63,600 67,416 70,787 74,326
Bank Charges 250 3,000 3,180
On
On this
thissheet:
sheet: 3,371 3,539 3,716
Cleaning Expenses These
These five
five year
500 annual
year annual cash flow
flow projections
6,000
cash projections are
are automatically
6,360 6,742
automatically compiled
compiled from
from the
the assumptions
7,079 assumptions 7,433
Computer Expenses entered
entered on
on the
333Assumptions
the Assumptions sheet.
sheet. The
4,000 The only user
user input
only4,240 input which isis required
which4,494 required on
on this sheet
4,719
this sheet isis adding
adding 4,955
Consumables additional rows
rows in
additional1,250 in the
the Expenses
15,000 section
Expenses section ifif additional
additional expense
15,900 16,854items
expense items have been
been added
have 17,697 added to to the
the
18,582
Electricity & Water Assumptions
Assumptions sheet.
sheet.
1,000 12,000 12,720 13,483 14,157 14,865
Entertainment 667 8,000 8,480 8,989 9,438 9,910
Equipment Hire 500 6,000 6,360 6,742 7,079 7,433
Insurance 833 10,000 10,600 11,236 11,798 12,388
Legal Fees 375 4,500 4,770 5,056 5,309 5,574
Motor Vehicle Expenses 3,000 36,000 38,160 40,450 42,472 44,596
Postage 167 2,000 2,120 2,247 2,360 2,478
Printing & Stationery 458 5,500 5,830 6,180 6,489 6,813
Professional Fees 1,417 17,000 18,020 19,101 20,056 21,059
Rent 10,000 120,000 127,200 134,832 141,574 148,652
Repairs & Maintenance 917 11,000 11,660 12,360 12,978 13,626
Salaries & Wages 50,000 600,000 636,000 674,160 707,868 743,261
Security 1,083 13,000 13,780 14,607 15,337 16,104
Subscriptions 483 5,800 6,148 6,517 6,843 7,185
Telephone & Fax 2,333 28,000 29,680 31,461 33,034 34,686
Training 1,500 18,000 19,080 20,225 21,236 22,298
Uniforms 417 5,000 5,300 5,618 5,899 6,194
Total Expenses 84,483 1,013,800 1,074,628 1,139,106 1,196,061 1,255,864

Profit before Interest & Tax 61,350 736,200 850,372 978,394 1,217,889 1,278,783

Changes in Working Capital (5,167) (62,000) (43,000) (48,000) (27,000) (21,000)

Inventory (1,250) (15,000) (16,000) (19,000) (5,000) (5,000)
Debtors (5,000) (60,000) (42,000) (45,000) (25,000) (26,000)
Creditors 1,083 13,000 15,000 16,000 3,000 10,000

Capital Expenditure (5,000) (60,000) (60,000) (100,000) (200,000) (200,000)

Annual Cash Flow 51,183 614,200 747,372 830,394 990,889 1,057,783

Inventory Days 21 21 21 21 21
Debtors Days 30 30 30 30 30
Creditors Days 14 14 14 14 14

Page 9 of 10
 Example Company (Pty) Limited
Business Valuation Calculation Dashboard

© www.excel-skills.com
ESTIMATED BUSINESS VALUE ESTIMATED BUSINESS VALUE WEIGHTED AVERAGE COST ESTIMATED BUSINESS VALUE
3 YEARS 5 YEARS OF CAPITAL PROFIT MULTIPLE

1,674,343 2,810,408 14.00% 1,840,500

DEBT FINANCE 1,004,606 DEBT FINANCE 1,686,245 COST OF DEBT 10.0% EBITDA * 736,200

EQUITY FINANCE 669,737 EQUITY FINANCE 1,124,163 COST OF EQUITY 20.0% MULTIPLE 2.50

TOTAL 1,674,343 TOTAL 2,810,408 DEBT % 60.0% * YEAR 1 PBIT PER FORECAST

Annual Free Cash Flow

On
Onthis
this
This
This sheet
sheet includes
includes all
all the
the business
business valuation
valuation calculations.
calculations. Th
Th
year 1,057,783
year and
and 5-year
5-year periods
periods based
based onon the
the weighted
weighted average
average cost
cost o
990,889
based
based on
on aa profit
profit multiple.
multiple. IfIf you
you set
set aa business
business value
value on
on th
th
estimated
estimated business valuations by using the net present value ((
business valuations by using the net present value
830,394
The
The sheet
sheet also
also includes
includes aa 5-year
5-year annual
annual cash
cash flow
flow chart
chart and
and aa cc
747,372

614,200

Year 1 Year 2 Year 3 Year 4 Year 5

Cash Flow Calculation Highlights

Year 1 Year 2 Year 3 Year 4 Year 5

Turnover 5,000,000 5,500,000 6,050,000 6,352,500 6,670,125

Annual Growth % 10.0% 10.0% 5.0% 5.0%

Gross Profit 1,750,000 1,925,000 2,117,500 2,413,950 2,534,648

Gross Profit % 35.0% 35.0% 35.0% 38.0% 38.0%

Total Expenses (1,013,800) (1,074,628) (1,139,106) (1,196,061) (1,255,864)

Annual Expense Inflation % 6.0% 6.0% 5.0% 5.0%

Profit Before Interest & Tax (PBIT) 736,200 850,372 978,394 1,217,889 1,278,783

PBIT % 14.7% 15.5% 16.2% 19.2% 19.2%

Changes In Working Capital (62,000) (43,000) (48,000) (27,000) (21,000)

Capital Expenditure (60,000) (60,000) (100,000) (200,000) (200,000)

Annual Cash Flow 614,200 747,372 830,394 990,889 1,057,783

Page 10 of 10