Winfield refuse management, inc

Principal repayment of 6.25 m

Interest payment in the year 1 is 8.125 m
(6.5% on 125 m)
Tax rate 35%
After tax payment is 5.281 m

Principal
Outstanding
Year

principal
repayments
interest @
6.5%

125.00 118.75
1

112.50 106.25 100.00

3

93.75 87.50 81.25 75.00 68.75 62.50 56.25 50.00 43.75 37.50

10

11

12

13

14

15

6.25

6.25

6.25

6.25

6.25

6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 37.50

8.13

7.72

7.31

6.91

6.50

6.09 5.69 5.28 4.88 4.47 4.06 3.66 3.25 2.84 2.44

Principal
Outstanding
Year

principal
repayments
interest @
6.5%
Cash outflow

125.00
1

118.75
2

112.50 106.25 100.00 93.75 87.50 81.25 75.00 68.75 62.50 56.25 50.00 43.75 37.50
3

10

11

12

13

14

15

6.25

6.25

6.25

6.25

6.25

6.25

6.25

6.25 6.25 6.25 6.25 6.25 6.25 6.25 37.50

8.13

7.72

7.31

6.91

6.50

6.09

5.69

5.28 4.88 4.47 4.06 3.66 3.25 2.84 2.44

14.38

13.97

13.56

13.16

12.75

12.34

11.94

11.53 11.13 10.72 10.31

9.91

9.50

9.09 39.94

Principal
Outstanding
Year

principal
repayments
interest @
6.5%

125.00
1

118.75
2

112.50 106.25 100.00 93.75 87.50 81.25 75.00 68.75 62.50 56.25 50.00 43.75 37.50
3

10

11

12

13

14

15

6.25

6.25

6.25

6.25

6.25

6.25

6.25

6.25 6.25 6.25 6.25 6.25 6.25 6.25 37.50

8.13

7.72

7.31

6.91

6.50

6.09

5.69

5.28 4.88 4.47 4.06 3.66 3.25 2.84 2.44

Cash outflow

14.38

13.97

13.56

13.16

12.75

12.34

11.94

11.53 11.13 10.72 10.31

Cash outflow
(after tax
subsidy)

11.53

11.27

11.00

10.74

10.48

10.21

9.95

9.68

9.42

9.15

8.89

9.91

9.50

9.09 39.94

8.63

8.36

8.10 39.08

 In the 1st year

Debt
11.53 m (interest + principal repayment)
Out standing is 125 m
11.53/125 is 9.225%

Equity
7.5 m as dividend (1$ per share as dividend)
7.5/125 is 6%

 However with equity

The dividends are going to be forever
1$ dividend might not be constant for long future
Trade-off between dividend and stock price

Andrea winfield
Consideration of principal repayment
Only interest it is 6.5%
On principal repayment 9.225%

Increased debt burden increase finance risks

Times interest Earned

EBIT of 66 million
11.53 m in 1st year
1.58 (10% on 15.8 million on leases)
66/(11.53+1.58) = 5x

Ted Kale
Winfield Refuse Management

Price-Earnings Ratio

Price/ Earnings (P/E)

High

Low

11.91

10.83

11.12

10.36

10.23

8.29

10.85

9.60

11.35

10.20

12.07

9.99

17.4

Waste Management

15.3

Republic Services

22.4

Waste Connections

Presently winfield is undervalued

As due to small size and uncertainty regarding the future plans

Ted Kale

common stock
(million )

ownership
percentage

Initial owners
holding
(million )

15

79%

11.85

22.5

52.67%

11.85

Long term debt to equity

James kintanga on debt policy

debt funded equity funded

equity

1,46,272

2,71,272

Retained earnings

5,23,295

5,23,295

Debt

125000

Leases

15813

D/E

0.21

15,813
0.02

Long-Term Debt to
Equity
Waste Management

1.5

Republic Services

0.9

Waste Connections

0.6

Progressive Waste Solutions

1.1

Casella Waste Systems

26.2

EBIT

bond

Bond (principal
repayment)

stock

24.35

0.7

0.7

0.29

66

2.51

1.91

2.09

0.04346

0.0290

0.04322

Slope

EPS vs EBIT
3

2.5

EPS

1.5

bond

1
stock
0.5
Bond (principal repayment)
0

10

20

30

40
EBIT

50

60

70

EBIT (million $)

24.35

66

Leasing Interest (million $)

Principal repayment
(million $)
Interest (million $)

1.581

1.581

6.25

6.25

8.125

8.125

Interest Coverage ratio

after tax (int + Principal
Repayment) (million $)
EBIT coverage

2.509

6.800

11.531

11.531

1.86

5.03