Thursday, July 23, 2009

Chapters Indigo - Model with LBO Module

I've been learning a lot in my courses, but I haven't had a chance to post any good lessons lately because I've been so busy.

However, last night, I took some time off to complete a model using everything we've learned so far. Although the model isn't "complete" (synergies from the LBO are not currently included), this model includes projections, debt schedules, working capital schedules, depreciation schedules, and even a model for leveraged buyouts and valuation.

There are plenty of comments outlining major assumptions in how these numbers were derived. I would encourage you to play with the numbers to understand the relationships in the model work for valuation purposes.

While the numbers look "good" (valuations are in the 20's and IDG:Indigo is trading at around $19) this information is provided without warranty as a strictly academic exercise only. Trading on this information is risky (beyond the standard business risk) as well as foolish and reckless.

I am not responsible for you using the model for the purposes of trading or other investment decisions. Consult a qualified financial adviser before making any investment decisions.

Chapters Model with LBO Module

Information for this model is based on the 2009 Chapters / Indigo Annual Report.

[Note] This spreadsheet contains circular references in order to calculate exact interest expense iteratively (using real cash gains from reduced interest expense to further reduce interest expense). Excel is usually configured to allow you to do this, however, you may have to change your settings to allow circular references.

1 comment:

eFinancialModels - Financial Model Templates said...

Nice model. However if you use the circular references to calculate interest rates, it makes it nearly impossible to run a decent sensitivity analysis of your model. It shouldn't be hard to find more important value drivers than interest rates. See the additional LBO model example