The Impact Of Capex And Working Capital

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2013 2014 2015 EBIT(1-tc) 1062600 1440600 8600200 Capital expenditure 391000 368000 387000 Depreciation 97000 270000 447000 Net Capex 294000 98000 -60000 △WC 6333000 -1937000 11240000 Reinvestment 6627000 -1839000 11180000 Reinvestment Rate 623.66% -127.66% 130.00% BV Equity (t-1) 5,650,000 9,477,000 15,592,000 BV Debt (t-1) 60,000 3,875,000 396,000 BV cash (t-1) 2,150,000 2,663,000 4,344,000 BV of capital (t-1) 3,560,000 10,689,000 11,644,000 Return on capital 29.85% 13.48% 73.86% G-EBIT 186.15% -17.20% 96.02% NPAT It is evident that net profit after tax showed a growing trend in the past. There, NPAT is projected to maintain the upward tendency. CAPEX and Working Capital Based on the chart above, it is clear that the CAPEX…show more content…
- βE is BAL’s equity beta. After determining the risk-free rate, we need to determine the beta coefficient. The regression beta can be calculated by using weekly share price of BAL’s and ASX S&P200. The result shows that the regression beta equals to 0.3183, however, the R-square is only 1.229%. Therefore, levered industry beta is more reliable than regression beta. Industry Beta Global Industry Name Number of firms D/E Tax rate Unlevered beta Food Processing 1228 0.00024 30% 0.72 According to Damodaran, the unlevered industry beta of SRV is 0.72, the levered beta of SRV is calculated as follow: βE=βA(1+D/E×(1-Tc))=0.72×(1+0.00024×(1-30%))=0.72 - EPR(equity market risk premium) is 6% in Australia. Cost of Equity Leverage beta 0.72 10 Years government bonds 2.42% Market risk premium 6% CAMP Cost of Equity 6.74% Cost of Debt In order to determine the cost of debt, interest coverage ratio should be computed firstly. Based on BAL’s annual report 2015, it is easily to calculate the interest coverage ratio that is 245.72, implying that credit rating is AAA. Therefore, the result of cost of debt should be 2.77%. Cost of Debt Credit Rating(AAA) 0.65% 5 Years government bonds 2.04% Cash 2% Current debt interest 2.65%=0.65%+2% Non-current debt interest (Cost of Debt) 2.69%=0.65%+2.04% Capital structure After reviewing the BAL’s annual report 2015, the current and non-current face value of debt can be used to calculate the debt market value.
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