Equity Value vs.

Enterprise Value Model - Basic

Equity Value & Enterprise Value Calculations

($ in Figures As Stated)

Equity Value Calculations: Diluted Shares Calculations:

Share Price: $ 100.00
Basic Shares Outstanding: 10,000 Exercise or
Dollar Par Conversion
Basic Equity Value: $ 1,000,000 Security Name: Amount: Value: Number: Price: Dilution:
Options: N /A N /A 500 $ 50.00 250
Diluted Shares Outstanding: 12,250 Convertible Bonds: $ 100,000 $ 1,000.00 100 $ 50.00 2,000
Diluted Equity Value: $ 1,225,000 Total Dilution: 2,250

Enterprise Value Calculations:

Diluted Equity Value: $ 1,225,000
Less: Cash & Cash-Equivalents: (50,000)
Plus: Debt: 100,000
Plus: Convertible Bonds: -
Plus: Noncontrolling Interests: 30,000
Plus: Preferred Stock 20,000
Enterprise Value: $ 1,325,000

Valuation Metrics and Multiples

($ in Figures As Stated)

Metric Name: Year 1 Year 2 Year 3 Year 4 Year 5

Revenue: $ 500,000 $ 550,000 $ 594,000 $ 623,700 $ 642,411
EBITDA: 100,000 110,000 118,800 124,740 128,482
EBIT: 80,000 88,000 95,040 99,792 102,786
Net Income: 40,000 44,000 47,520 49,896 51,393
Unlevered Free Cash Flow (Free Cash Flow to Firm): 60,000 66,000 71,280 74,844 77,089
Levered Free Cash Flow (Free Cash Flow to Equity): 48,000 52,800 57,024 59,875 61,671

Multiple Name: Year 1 Year 2 Year 3 Year 4 Year 5

Enterprise Value / Revenue: 2.7 x 2.4 x 2.2 x 2.1 x 2.1 x
Enterprise Value / EBITDA: 13.3 x 12.0 x 11.2 x 10.6 x 10.3 x
Enterprise Value / EBIT: 16.6 x 15.1 x 13.9 x 13.3 x 12.9 x
Equity Value / Net Income (P / E): 30.6 x 27.8 x 25.8 x 24.6 x 23.8 x
Enterprise Value / FCFF: 22.1 x 20.1 x 18.6 x 17.7 x 17.2 x
Equity Value / FCFE: 25.5 x 23.2 x 21.5 x 20.5 x 19.9 x
Equity Value vs. Enterprise Value Model - Advanced

Equity Value & Enterprise Value Calculations

($ in Figures As Stated)

Equity Value Calculations: Diluted Shares Calculations:

Share Price: $ 100.00
Basic Shares Outstanding: 10,000 Exercise or
Dollar Par Conversion
Basic Equity Value: $ 1,000,000 Security Name: Amount: Value: Number: Price: Dilution:
Options: N /A N /A 500 $ 50.00 250
Diluted Shares Outstanding: 13,275 Convertible Bonds: $ 100,000 $ 1,000.00 100 $ 50.00 2,000
Diluted Equity Value: $ 1,327,500 Convertible Preferred: $ 50,000 $ 1,000.00 50 $ 80.00 625
RSUs: N /A N /A 200 N /A 200
Enterprise Value Calculations: Performance Shares: N /A N /A 200 $ 75.00 200
Diluted Equity Value: $ 1,327,500 Total Dilution: 3,275
Less: Cash & Cash-Equivalents: (50,000)
Less: Equity Investments: (10,000)
Less: Value of NOLs: (5,000)
Plus: Debt: 100,000
Plus: Convertible Bonds: -
Plus: Convertible Preferred Stock: -
Plus: Noncontrolling Interests: 30,000
Plus: Preferred Stock 20,000
Plus: Unfunded Pension Obligations: 50,000
Plus: Capital Leases: 35,000
Plus: Restructuring Liabilities: 10,000
Enterprise Value: $ 1,507,500

Valuation Metrics and Multiples

($ in Figures As Stated)

Metric Name: Year 1 Year 2 Year 3 Year 4 Year 5

Revenue: $ 500,000 $ 550,000 $ 594,000 $ 623,700 $ 642,411
EBITDA: 100,000 110,000 118,800 124,740 128,482
EBIT: 80,000 88,000 95,040 99,792 102,786
Net Income: 40,000 44,000 47,520 49,896 51,393
Unlevered Free Cash Flow (Free Cash Flow to Firm): 60,000 66,000 71,280 74,844 77,089
Levered Free Cash Flow (Free Cash Flow to Equity): 48,000 52,800 57,024 59,875 61,671

Multiple Name: Year 1 Year 2 Year 3 Year 4 Year 5

Enterprise Value / Revenue: 3.0 x 2.7 x 2.5 x 2.4 x 2.3 x
Enterprise Value / EBITDA: 15.1 x 13.7 x 12.7 x 12.1 x 11.7 x
Enterprise Value / EBIT: 18.8 x 17.1 x 15.9 x 15.1 x 14.7 x
Equity Value / Net Income (P / E): 33.2 x 30.2 x 27.9 x 26.6 x 25.8 x
Enterprise Value / FCFF: 25.1 x 22.8 x 21.1 x 20.1 x 19.6 x
Equity Value / FCFE: 27.7 x 25.1 x 23.3 x 22.2 x 21.5 x