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Discounted Cash Flow (DCF) Analysis Unlevered


Microsoft Corporation

Microsoft Corporation (MSFT)

Technology

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Actual
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 77,849.0086,832.7793,579.6891,155.9796,570.63110,360.92125,844.55136,528.76148,120.05160,695.44174,338.48
Revenue (%)
EBITDA 30,804.8533,031.1924,461.7332,260.1038,676.5446,737.8555,371.6051,799.0156,196.7560,967.8566,144.02
EBITDA (%)
EBIT 27,052.5327,821.2218,500.7025,642.1729,898.2736,474.2843,693.2341,627.6245,161.8048,996.0453,155.80
EBIT (%)
Depreciation 3,752.325,209.975,961.036,617.928,778.2710,263.5711,678.3710,171.3911,034.9411,971.8112,988.22
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Actual
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 77,023.8085,712.6396,527.44113,243.06132,977.76133,768.47133,823.10154,140.97167,227.54181,425.15196,828.15
Total Cash (%)
Account Receivables 17,484.8919,546.0617,911.1518,276.7722,433.3626,475.5829,523.1330,200.1632,764.1535,545.8338,563.67
Account Receivables (%)
Inventories 1,938.442,657.082,900.972,251.552,182.502,659.702,063.853,399.573,688.194,001.324,341.03
Inventories (%)
Accounts Payable 5,472.787,988.626,681.597,192.217,387.658,619.199,388.0010,567.3311,464.4912,437.8313,493.80
Accounts Payable (%)
Capital Expenditure -4,258.34-5,487.83-5,942.31-8,340.77-8,131.25-11,632.04-13,930.99-11,181.71-12,131.03-13,160.96-14,278.32
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 136.33
Diluted Shares Outstanding 7,753.00
Cost of Debt
Tax Rate 10.18
After-tax Cost of Debt -0.46
Risk-Free Rate
Market Risk Premium
Cost of Equity 12.14
Total Debt 72,850.00
Total Equity 1,056,966.49
Total Capital 1,129,816.49
Debt Weighting 6.45
Equity Weighting 93.55
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Actual
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 77,849.0086,832.7793,579.6891,155.9796,570.63110,360.92125,844.55136,528.76148,120.05160,695.44174,338.48
EBITDA 30,804.8533,031.1924,461.7332,260.1038,676.5446,737.8555,371.6051,799.0156,196.7560,967.8566,144.02
EBIT 27,052.5327,821.2218,500.7025,642.1729,898.2736,474.2843,693.2341,627.6245,161.8048,996.0453,155.80
Tax Rate 19.18%20.65%34.12%19.89%14.76%54.57%10.18%24.76%24.76%24.76%24.76%
EBIAT 21,863.4322,074.9712,188.8520,541.5425,486.6716,571.1339,244.7031,318.9333,977.9036,862.6339,992.27
Depreciation 3,752.325,209.975,961.036,617.928,778.2710,263.5711,678.3710,171.3911,034.9411,971.8112,988.22
Accounts Receivable --2,061.171,634.91-365.62-4,156.59-4,042.23-3,047.55-677.03-2,563.99-2,781.68-3,017.84
Inventories --718.64-243.89649.4269.06-477.20595.85-1,335.72-288.62-313.13-339.71
Accounts Payable -2,515.83-1,307.03510.62195.451,231.53768.821,179.32897.17973.341,055.97
Capital Expenditure -1,229.49454.482,398.46-209.523,500.792,298.95-2,749.29949.331,029.921,117.37
UFCF 25,615.7528,250.4418,688.3530,352.3430,163.3327,047.5951,539.1437,907.6144,006.7247,742.9051,796.27
WACC
PV UFCF 27,236.4328,319.4127,517.8926,739.06
SUM PV UFCF 197,037.36

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 11.65
Free cash flow (t + 1) 53,868.12
Terminal Value 704,158.40
Present Value of Terminal Value 405,860.45

Intrinsic Value

Enterprise Value 602,897.80
Net Debt -60,973.10
Equity Value 663,870.90
Shares Outstanding 7,753.00
Equity Value Per Share 85.63

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
13.65 (%) 62.92 Sell 65.60 Sell 68.73 Sell 72.46 Sell 76.96 Sell 82.49 Sell 89.48 Sell 98.56 Sell 110.86 Sell
13.15 (%) 61.23 Sell 63.67 Sell 66.51 Sell 69.86 Sell 73.87 Sell 78.76 Sell 84.84 Sell 92.63 Sell 102.95 Sell
12.65 (%) 59.67 Sell 61.90 Sell 64.48 Sell 67.51 Sell 71.10 Sell 75.44 Sell 80.77 Sell 87.51 Sell 96.27 Sell
12.15 (%) 58.23 Sell 60.27 Sell 62.63 Sell 65.37 Sell 68.60 Sell 72.47 Sell 77.18 Sell 83.05 Sell 90.56 Sell
11.65 (%) 56.90 Sell 58.77 Sell 60.92 Sell 63.41 Sell 66.33 Sell 69.80 Sell 73.98 Sell 79.13 Sell 85.63 Sell
11.15 (%) 55.66 Sell 57.39 Sell 59.36 Sell 61.63 Sell 64.27 Sell 67.39 Sell 71.12 Sell 75.67 Sell 81.33 Sell
10.65 (%) 54.51 Sell 56.10 Sell 57.91 Sell 59.99 Sell 62.39 Sell 65.21 Sell 68.55 Sell 72.59 Sell 77.56 Sell
10.15 (%) 53.44 Sell 54.91 Sell 56.58 Sell 58.48 Sell 60.67 Sell 63.22 Sell 66.23 Sell 69.83 Sell 74.22 Sell
9.65 (%) 52.44 Sell 53.81 Sell 55.34 Sell 57.09 Sell 59.09 Sell 61.41 Sell 64.13 Sell 67.36 Sell 71.25 Sell