Simplification

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RiskFreeRate 4% Practical Exercise you need to do
MarketReturns 10%
Beta 1.25 1. Do good practice of Name Manager. Go
Formula - Name Manager - Create from
CostofDebt 14% Selection
TaxRate 30%
EquityValue 125000
DebtValue 125000

Cost of Capital 10.65%

Cost of Capital 10.65%

Cost of Capital Use name Manager and solve this

xercise you need to do
practice of Name Manager. Go to
ame Manager - Create from
 Practical Exercise you need to do
RiskFreeRate 4%
MarketReturns 10% 1. Do good practice of Name Manager. Formula - N
ERP 6% Use name Manager and solve this
2. Create this from scratch in your own spreadshee
Beta 1.25
CostofEquity 11.50% Use name Manager and solve this 3. Complete below excercise (use instructions) - NO
- Complete the forecast using Names
- Highlight cells K23:L25 and create name for cells
CostofDebt 14% - Complete "Next Year Sales"(L27) using Names
- Complete "Cost of Sales" (L28) using names
Tax Rate 30% - Reduce Cost of sales from Next year sales to get "
Post Tax Cost of Debt 9.8% Use name Manager and solve this

Equity Value 125000

Debt Value 125000
Equity Funding 50.00% Use name Manager and solve this
Debt Funding 50.00% Use name Manager and solve this

Cost of Capital 10.65%

Cost of Capital 10.65%

Cost of Capital 10.65% Use name Manager and solve this

Cost of Capital 10.65% Use name Manager and solve this

l Exercise you need to do
od practice of Name Manager. Formula - Name Manager - Create from Selection

this from scratch in your own spreadsheet (repeat what I have done in video)

ete below excercise (use instructions) - NO SOLUTION PROVIDED FOR THIS - DIY
te the forecast using Names
ht cells K23:L25 and create name for cells L23, L24, and L25
te "Next Year Sales"(L27) using Names
te "Cost of Sales" (L28) using names
Cost of sales from Next year sales to get "Gross Profit" (L29)

Exercise
Current Sales 15,000.0
Sales Growth 10%
Gross Margin 60%

Next Year Sales 16500

Cost of Sales 6600
Gross Profit 9900
D/E Ratio 25%
Coupon Rate 9.50% 9.50%

D/E Ratio Risk Rating Coupon Rate

0% Baa2 9.50%
30% Baa3 9.75%
50% Ba1 12.25%
60% Ba2 13.75%

D/E Ratio 55%

Coupon Rate 12.25% Use VLOOKUP to solve this - Approximate Match (1)

D/E Ratio Risk Rating Coupon Rate

0% Baa2 9.50%
30% Baa3 9.75%
50% Ba1 12.25%
60% Ba2 13.75%
Advanced Simplification
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Current Sales 14,500.0 Practical Exercise you need to do
Sales Growth 10.00%
1. Use goal seek function - Our goal here is
Gross Margin 60.00% at which gross profit will be 11,000

Next Year Sales 15,950.0 2. First select cell C12, the go to Data Menu
Seek
Cost of Sales -6,380.0
Gross Profit 9,570.0 3. Ensure "Set cell" is set to C12 - this is the
goal

4. Input 11000 in "To Value" - this is our goa

5. Ensure "By Changing Value" is set to C7 -

change to achieve goal of 11000 gross profi
Exercise you need to do
l seek function - Our goal here is identify the Sales growth
ross profit will be 11,000

ect cell C12, the go to Data Menu - What if Analysis - Goal

"Set cell" is set to C12 - this is the cell where we set of our

1000 in "To Value" - this is our goal we want to achieve.

"By Changing Value" is set to C7 - this is what we want to

achieve goal of 11000 gross profit.
Current Sales 14,500.0 Practical Exercise you need to do
Sales Growth 10.00%
1. Ensure that data is cell C16 should be LINK
Gross Margin 60.00% and not pasted specially as values.

Next Year Sales 15,950.0 2. Select your data table B16:C25

Cost of Sales -6,380.0 3. Go to Data>What If Analysis>Data Table
Gross Profit 9,570.0
4. In "Column Input Cell" Select your input wh
column. In this case, it is Sales growth, so we

5. Practice this multiple times.

Sales Growth Gross Profit
9,570.0
8.00% 9,396.0
10.00% 9,570.0
12.00% 9,744.0
14.00% 9,918.0
16.00% 10,092.0
18.00% 10,266.0
20.00% 10,440.0
22.00% 10,614.0
24.00% 10,788.0
Exercise you need to do
that data is cell C16 should be LINKED with your calculation
asted specially as values.

our data table B16:C25

ata>What If Analysis>Data Table

mn Input Cell" Select your input which is mentioned in

n this case, it is Sales growth, so we will put $C$4. Press OK

this multiple times.

Current Sales 14,500.0 Practical Exercise
Sales Growth 10.00%
Gross Margin 60.00% Watch video and
that you have goo
inputs. It's popul
Next Year Sales 15,950.0
Cost of Sales -6,380.0
Gross Profit 9,570.0

Gross Margin
9,570.0 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%
8.00% 6,264.0 7,830.0 9,396.0 10,962.0 12,528.0 14,094.0
10.00% 6,380.0 7,975.0 9,570.0 11,165.0 12,760.0 14,355.0
12.00% 6,496.0 8,120.0 9,744.0 11,368.0 12,992.0 14,616.0
Sales Growth 14.00% 6,612.0 8,265.0 9,918.0 11,571.0 13,224.0 14,877.0
16.00% 6,728.0 8,410.0 10,092.0 11,774.0 13,456.0 15,138.0
18.00% 6,844.0 8,555.0 10,266.0 11,977.0 13,688.0 15,399.0
20.00% 6,960.0 8,700.0 10,440.0 12,180.0 13,920.0 15,660.0
22.00% 7,076.0 8,845.0 10,614.0 12,383.0 14,152.0 15,921.0
24.00% 7,192.0 8,990.0 10,788.0 12,586.0 14,384.0 16,182.0
Practical Exercise you need to do

Watch video and do it with me simultaneously. Its VERY IMP

that you have good hold on operating data tables with two
inputs. It's popularily known as Scenario Analysis.
Scenario Summary
Current Values: Base Case Worst Case Best case
Changing Cells:
$C$6 14,500.0 14,500.0 13,500.0 16,500.0
$C$7 10.00% 10.00% 7.00% 20.00%
$C$8 60.00% 60.00% 50.00% 80.00%
Result Cells:
$C$10 15,950.0 15,950.0 14,445.0 19,800.0
$C$11 -6,380.0 -6,380.0 -7,222.5 -3,960.0
$C$12 9,570.0 9,570.0 7,222.5 15,840.0
Notes: Current Values column represents values of changing cells at
time Scenario Summary Report was created. Changing cells for each
scenario are highlighted in gray.
Current Sales 14,500.0
Sales Growth 10.00%
Gross Margin 60.00%

Next Year Sales 15,950.0

Cost of Sales -6,380.0
Gross Profit 9,570.0
Practical Exercise you need to do
1. Go to Data> What if Analysis > Scenario Manager
2. Click on 'Add Scenario'

3. Name your Scenario (Worst Case/Base Case/Best Case); then

mention Input cells (C6:C8) in Changing Cells. Press OK

4. Now "Scenario Values" window will open. Input Current

Sales/Sales Growth Percent/Gross Margin as per cell selected. Press
Ok. The Scenario is now added in Scenario Manager.

5. Add remaining scenarios.

6. Once all scenarios are added, Open Scenario Manager - Press

'Summary' to get result of all scenarios. Keep report type as
"Scenario Summary"
ager

Best Case); then

ress OK

put Current
er cell selected. Press
nager.

Manager - Press
eport type as
Current Sales 14,500.0 Practical Exercise you need
Sales Growth 10.00%
1. Use Data Validation on cell
Gross Margin 80.00% open the data validation - Alt+

Next Year Sales 15,950.0 2. Your Sales Growth rate sho

Validation - Settings Tab
Cost of Sales -3,190.0
Gross Profit 12,760.0 3. On 'Input Message' tab, set
"Sales growth generally range
box.

4. On the 'Error Alert' tab, set

message you want. For Eg - "R
lies between 0%-10%"

5. Once complete - Test it to e

6. Practice 'Circle Invalid Data

sessions.
actical Exercise you need to do
Use Data Validation on cell C7 i.e. Sales growth percent input cell. To
en the data validation - Alt+A+V+V
Your Sales Growth rate should be between 0 to 10% on Data
lidation - Settings Tab
On 'Input Message' tab, set title as "Please Note:" and then type
ales growth generally ranges between 0 to 10%" in 'Input Message'
x.

On the 'Error Alert' tab, set the style to 'Warning' and type the error
essage you want. For Eg - "Recheck Sales growth percent, historically it
s between 0%-10%"

Once complete - Test it to ensure data validation is working properly.

Practice 'Circle Invalid Data' function once - We will use it in future

ssions.
Scenario Summary
Current Values: base case worst case Best case
Changing Cells:
$C$6 14,500.0 14,500.0 13,500.0 16,500.0
$C$7 10.00% 10.00% 7.00% 15.00%
$C$8 60.00% 60.00% 40.00% 70.00%
Result Cells:
$C$10 15,950.0 15,950.0 14,445.0 18,975.0
$C$11 -6,380.0 -6,380.0 -8,667.0 -5,692.5
$C$12 9,570.0 9,570.0 5,778.0 13,282.5
Notes: Current Values column represents values of changing cells at
time Scenario Summary Report was created. Changing cells for each
scenario are highlighted in gray.
Current Sales 14,500.0 Practical Exercise you need to do
Sales Growth 10.00%
Watch video again and do it with me simulta
Gross Margin 60.00% important excercise to ensure that no one c
model
Next Year Sales 15,950.0
Cost of Sales -6,380.0
Gross Profit 9,570.0
se you need to do
in and do it with me simultaneously. Its very
cise to ensure that no one can mess up with your