Future Growth, Cap Ex and EBITDA
This section allows the user to provide inputs for the future operations of the business. BVX calculates future sales, future capital expenditures and future EBITDA based on inputs in this section.
Future Sales: Future sales are calculated based on inputs in this cell.
a) User can provide input for constant % sales growth over the next five years, or
b) Using Advanced Features user can enter different % sales growth for each year, or
c) Using Advanced Features user can enter different amount of sales in absolute amount for each of the five years.
• Sales for the each of the next five years are increased by the same % amount entered in this cell.
• To increase sales by 5%, enter 5 in this cell. Do not enter the % symbol i.e. do not enter 5%.
• Example: If Year-0 Sales (see Income Statement) are 1000, and 5 is entered in the sales growth cell, then Year-1 sales will be increased by 5% to 1050;
Year-2 sales will increase by another 5% to 1102.5; and so on.
• To change sales growth by a different % each year, use Advanced Feature: Sales Growth.
• When Advanced Feature for Sales is activated this cell gets blacked out.
Future Capital Expenditures: Enter annual capital expenditures for purchase of new fixed assets as a % of Final Adj. EBITDA.
a) User can provide input for capital expenditures as a constant % EBITDA over the next five years, or
b) Using Advanced Features user can enter different amount of capital expenditures in absolute amount for each of the five years.
• BVX calculates capital expenditures for each year by multiplying the % entered in this cell by the EBITDA for the respective year. Example: If 10% is entered in this cell, and if EDBITDA for Year-1 and Year-2 is 1000 and 1100 respectively, then capital expenditures for Year-1 and Year-2 will be 100, and 110 respectively.
• If capital expenditures are estimated to be 10% of EBITDA, enter 10. Do not enter the % symbol i.e. do not enter 10%.
• Capital expenditures are new fixed assets. They are depreciated, on a straight-line basis, over the number of years specified in New Fixed Assets Write-Off or at a rate specified in Internal Settings.
• Cash flow for each year is reduced by the capital expenditures based on input in this cell. However, BVX allows financing of the capital expenditures. This is achieved by entering the appropriate financing data in Cap Ex Loan: % of Cap Ex.
• To change capital expenditures for each year, use Advanced Features: Capital Expenditure.
• When Advanced Feature for Capital Expenditures is activated this cell gets blacked out.
Future EBITDA Margin: This cell allows input for EBITDA margin as a % of Sales for the future years. Future EBITDA margin can increase or decrease as a result of strategic buyer, cost reductions, new expenses, or for any other reason.
a) User can provide input for EBITDA margin as a constant % of Sales over the next five years, or
b) Using Advanced Features user can enter different EBITDA margin as % of Sales for each year, or
c) Using Advanced Features user can enter EBITDA in absolute amount for each of the five years
• Default value in this cell is “Same”. “Same” means that the EBITDA margin for the next five years will be the same as that in Year-0, which is the Final Adj. EBITDA. Any time the value of the Final Adj. EBITDA changes; this cell defaults to “Same”.
• To change the default value, enter a numerical value for the EBITDA margin as % of Sales. Example: If Final Adj. EBITDA margin is 15%, and you want the future margin to be 17%, then enter 17 (without the % symbol) in this cell. All financials will be based on 17% EBITDA margin.
• To change EBITDA margin for each year, use Advanced Features: EBITDA Margin.
• When Advanced Feature for EBITDA Margin is activated this cell gets blacked out.
Compatibility with older version: In version 1.1.1 of BVX, this cell contained EBITDA synergy rather than actual EBITDA margin. BVX will automatically change old valuation files with EBITDA synergy.