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Assignment Red Mud 2nd Round IMPROVED CF

You have been selected to participate in the second round of IMPROVED's application process. The task is to create an operational model in Excel for the ketchup company Red Mud to value the company using a discounted cash flow analysis. The model should include interrelated income statements, balance sheets, and cash flow statements. Assumptions are provided for inputs like tomato costs, sales growth, equipment costs, financing structure, inflation, and personnel costs to build the 10-year forecast. Good luck with the assignment.

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Victor. Huamani
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117 views1 page

Assignment Red Mud 2nd Round IMPROVED CF

You have been selected to participate in the second round of IMPROVED's application process. The task is to create an operational model in Excel for the ketchup company Red Mud to value the company using a discounted cash flow analysis. The model should include interrelated income statements, balance sheets, and cash flow statements. Assumptions are provided for inputs like tomato costs, sales growth, equipment costs, financing structure, inflation, and personnel costs to build the 10-year forecast. Good luck with the assignment.

Uploaded by

Victor. Huamani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Assignment applicants 2nd round IMPROVED Corporate Finance: “Red Mud”

Congratulations! We chose you to participate in the 2nd round of the application process of IMPROVED.

The idea is that you make an operational model of ketchup factory Red Mud, on the basis of which a valuation of
the company can be made (DCF analysis). For this, you first make (in excel) an interrelated P&L and Balance
Sheet with a subsequent Cash-Flow statement. The cash on the balance sheet is your closing item for the model.

The assumptions are as follows:

Input
Cost tomato per kg in EUR 0.30
Ratio of tomatoes for tomato ketchup (in kg) 1.10
Tomato ketchup sold in yr 1 in kg 1,000,000
Sales price of tomato ketchup in yr 1 1.00
Growth rate of yearly sales 10.0%
Cost per 100.000 bottles in EUR 10,000
Bottles bought in year 1 1,000,000
Number of bottles per pallet (minimum order) 100,000
Capacity of Puree machine per year (in kg tomatoes) 2,000,000
Cost puree machine per 1,000,000 kg 100,000
Lifetime puree machine in years 15
Investment puree machine in EUR 1,000,000
Operator per puree machine 3
Costs operator per year 40,000
Costs manager per year 60,000
Rent per year 50,000
Tax rate 25.0%
Debt Financing structure in % 50.0%
Equity Financing structure in % 50.0%

The fixed assets are purchased in year 1 with the deposited Equity and a bank loan, which is paid off over a
period of 10 years. 10 years is also the period for which you make the forecast.
In addition, take into account an annual inflation rate of 2% and an increase in personnel costs of 3%. Cost of
debt is 6%, cost of equity 10%. Dividend payout ratio is 30%.

If you feel that you are still missing input, make an assumption and write down this assumption in the comments
of your model.

Good luck!

IMPROVED Corporate Finance BV T: +31 (0)20 792 0006


KvK: 58575510 Apollolaan 153-4, 1077AS te Amsterdam
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