ThinPanels, LLC. ThinPanels, LLC. (TP) is on the leading edge of roof-integrated solar panels technology. Currently, TP is a private, closely held company, but the founders may consider a future IPO.
Instructions:
Using the attached template as a guide, create a fresh single-tab spreadsheet to analyze the following case:
ThinPanels, LLC.
ThinPanels, LLC. (TP) is on the leading edge of roof-integrated solar panels technology. Currently, TP is a private, closely held company, but the founders may consider a future IPO.
Once established, the company moved to a well-equipped $20-million facility that will depreciate straight-line to zero-book value over 4 years. In its first year of operations (2020), TP sold 4,000 units at $24,000 each. TP entered into forward contracts to keep AVC at 50% of the price and designed long-term compensation packages to keep GS&A at $10 million. The company expects sales to grow at 20% in 2021 and 25% in 2022. TP expects a 6% longterm FCF growth rate after 2022. TP plans to keep its prices fixed and use new technological advances to enhance its product to stay competitive and increase its market share.
Analytics indicate that effective operations require the following practices:
3-month sales cash
2-month sales accounts receivable
2-month sales inventory
1-month sales accounts payable
1-month sales accrued expenses
The CFO invests all extra funds in an aggressive but hedged, highly diversified portfolio that can be tapped when needed. The portfolio is not required for operations, and, for valuation purposes, it is considered a non-operating asset. The portfolio yields no income, and the prices of its underlying securities determine its return. The portfolio acts as a buffer to absorb retained earnings and keep current assets and liabilities at the desired levels.
The founders started TP with an equity fund of $60 million, then issued and sold a privately held 5-year, 10% bond for $40 million at face value. TP considers its capital structure of 60% equity and 40% debt ideal and plans to maintain it. TP has a Beta of 1.5(RE =1.5), risk- free rate of return is 4%, and the market risk premium is 6%.
Accordingly, its WACC is 10.2%. The company has a dividend payout ratio of 10% and a federal-to-state tax of 40%.
Required
Prepare balance sheets and income statements for 2020-2022
Calculate 2021-2022 FCF, ROIC, and EVA
FIN665_Fall 21_MT Name:
| 1 | Balance Sheet | ThinPanels, LLC | ||
| 2 | ASSETS | 2020 | 2021 | 2022 |
| 3 | Cash (3-month) | |||
| 4 | Accounts Receivable (2-month) | |||
| 5 | Inventory (2-month) | |||
| 6 | Total Current Operating Assets | |||
| 7 | Invested Portfolio | |||
| 8 | Total Current Assets | |||
| 9 | Gross PPE | |||
| 10 | Accumulated Depreciation | |||
| 11 | Net PPE | |||
| 12 | Total Assets | |||
| 13 | Liabilities and Shareholders' Equity | |||
| 14 | Accounts Payable (1-month) | |||
| 15 | Accrued Expenses (1-month) | |||
| 16 | Total Current Liabilities | |||
| 17 | Long-term Debt | |||
| 18 | Total Liabilities | |||
| 19 | Paid In Capital (Founders Equity) | |||
| 20 | Retained Earnings | |||
| 21 | Total Common Equity | |||
| 22 | Total Liab. & O E | |||
| 23 | Income Statement | |||
| 24 | Sales | |||
| 25 | Cost of Goods Sold | |||
| 26 | Gross Profit | |||
| 27 | Selling & Admin. Expense | |||
| 28 | EBITDA | |||
| 29 | Depreciation | |||
| 30 | Operating Profit (EBIT) | |||
| 31 | Interest Expense | |||
| 32 | Earnings Before Taxes (EBT) | |||
| 33 | Taxes @ 40% | |||
| 34 | Net income | |||
| 35 | Dividend | |||
| 36 | Change in Retained Earning | |||
| 37 | Free cash flow | |||
| 38 | Operating Profit | |||
| 39 | Tax on Operating Profit | |||
| 40 | NOPAT | |||
| 41 | Operating Current Assets | |||
| 42 | Operating Current Liabilities | |||
| 43 | NOWC | |||
| 44 | Net PPE | |||
| 45 | Total net operating capital | |||
| 46 | New Investment in Operating Capital (∆IC) | |||
| 47 | FCF=NOPAT+D- ∆IC | |||
| 48 | ROIC | |||
| 49 | EVA |
