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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 77,849.0086,832.7793,579.6885,316.6089,949.29110,358.78125,842.12136,878.47148,882.71161,939.73176,141.84
Revenue (%)
EBITDA 30,516.8132,970.4024,115.4826,806.4731,104.4645,324.3554,640.6549,550.0153,895.5458,622.1863,763.35
EBITDA (%)
EBIT 26,764.4927,760.4418,154.4620,185.9122,325.4135,060.9842,962.5039,133.5542,565.5746,298.5750,358.95
EBIT (%)
Depreciation 3,752.325,209.975,961.036,620.578,779.0510,263.3711,678.1510,416.4511,329.9712,323.6113,404.39
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 77,023.8085,712.6396,527.44113,240.72132,981.03133,765.8811,350.96139,150.65151,354.16164,627.93179,065.79
Total Cash (%)
Account Receivables 17,484.8919,546.0617,911.1518,274.8119,788.8426,486.1129,522.5630,304.8932,962.6335,853.4638,997.80
Account Receivables (%)
Inventories 1,938.442,657.082,900.972,252.362,176.772,659.652,063.813,476.713,781.624,113.274,474.00
Inventories (%)
Accounts Payable 4,826.647,432.896,588.016,902.117,393.838,619.029,387.8210,430.1411,344.8612,339.8113,422.01
Accounts Payable (%)
Capital Expenditure 4,258.345,487.835,942.318,343.968,131.4211,631.8213,930.7211,456.7312,461.4813,554.3614,743.07
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 166.5
Diluted Shares Outstanding 7,673.00
Cost of Debt
Tax Rate 10.18
After-tax Cost of Debt -0.46
Risk-Free Rate
Market Risk Premium
Cost of Equity 12.26
Total Debt 66,662.00
Total Equity 1,277,554.50
Total Capital 1,344,216.50
Debt Weighting 4.96
Equity Weighting 95.04
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 77,849.0086,832.7793,579.6885,316.6089,949.29110,358.78125,842.12136,878.47148,882.71161,939.73176,141.84
EBITDA 30,516.8132,970.4024,115.4826,806.4731,104.4645,324.3554,640.6549,550.0153,895.5458,622.1863,763.35
EBIT 26,764.4927,760.4418,154.4620,185.9122,325.4135,060.9842,962.5039,133.5542,565.5746,298.5750,358.95
Tax Rate 19.18%20.65%34.12%14.95%8.40%54.57%10.18%23.15%23.15%23.15%23.15%
EBIAT 21,630.6422,026.7411,960.7317,167.8820,449.6115,929.0338,588.3630,073.8732,711.3535,580.1338,700.51
Depreciation 3,752.325,209.975,961.036,620.578,779.0510,263.3711,678.1510,416.4511,329.9712,323.6113,404.39
Accounts Receivable --2,061.171,634.91-363.66-1,514.03-6,697.26-3,036.45-782.33-2,657.74-2,890.82-3,144.35
Inventories --718.64-243.89648.6175.59-482.87595.84-1,412.90-304.91-331.65-360.73
Accounts Payable -2,606.25-844.88314.10491.721,225.19768.801,042.32914.72994.941,082.20
Capital Expenditure --1,229.49-454.48-2,401.65212.55-3,500.40-2,298.912,473.99-1,004.76-1,092.87-1,188.72
UFCF 25,382.9625,833.6518,013.4221,985.8528,494.4916,737.0546,295.7941,811.4040,988.6444,583.3548,493.31
WACC
PV UFCF 37,374.9932,751.8831,844.3030,961.88
SUM PV UFCF 176,773.15

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 11.87
Free cash flow (t + 1) 50,433.04
Terminal Value 640,826.44
Present Value of Terminal Value 365,739.81

Intrinsic Value

Enterprise Value 542,512.96
Net Debt 55,311.04
Equity Value 487,201.92
Shares Outstanding 7,673.00
Equity Value Per Share 63.50