Performance Analysis of CSR LTD. in Forecasted Period

Running head: CORPORATE FINANCE
Corporate Finance
Name of the student:
Name of the University:
Author’s Note:

1
CORPORATE FINANCE
Executive summary
The study sheds light on the performance analysis of the CSR LTD. in the forecasted period.
The capital structure has been identified through the analysis of WACC. The performance
analysis included the analysis of the profit and loss statement and the cash flow statement in
the forecasted period. For the better evaluation of the performance a forecasted cash flow has
been prepared which has helped to create FCFF at the forecasted period. For the evaluation of
the company value beyond the forecasted period a terminal value has been identified. The
terminal value identification has helped the study to identify the company’s earning
capability beyond the forecasted period at time “n”. Further, the study has provided idea on
the share price analysis. This has also included a comparison between the actual share price
and estimated share price at time Zero. To identify the difference the study has provided the
reason of the difference.

2
CORPORATE FINANCE
Table of Contents
Introduction................................................................................................................................3
Determination of non cash and cash items in P&L statement...................................................3
Forecasted Operating cash flow.................................................................................................4
Forecasted P&L statement.........................................................................................................4
Identification of WACC.............................................................................................................5
Calculation of terminal value.....................................................................................................5
Debt to equity ratio analysis and the calculation of the equity value.........................................6
Equity value...............................................................................................................................6
Compression of the estimated share price..................................................................................7
Conclusion..................................................................................................................................8
References................................................................................................................................10

3
CORPORATE FINANCE
Introduction
Performance analysis is the best way to identify the company’s capability in earning
returns at the future period. This analysis has been done through evaluating the financial
statements and information. This has been done to identify the growth prospective of the
company where investors search their invest opportunity. The performance analysis includes
the identification of the cash inflow in the future time and the present value of the project
before investing. The financial analysis includes the identification of the terminal value
through which company’s value beyond the forecasted period has been recognised. For the
better understanding of the financial performance the report has contracted a financial
analysis of the CSR LTD. The study has identified financial performance through the analysis
of financial statement, future cash flow and free cash flow statement. The study also includes
the identification of the present value depending on the discount rate which has been derived
from the commonwealth government bond rates. Further, the report includes the
identification of the cost of capital which has helped the researcher to understand company’s
capital structure. Lastly, depending on the company’s equity value the share value has been
calculated and a comparison has been done with the market price to understand the reason of
the difference.
Determination of non cash and cash items in P&L statement
The P&L account provides idea on the company’s income through deducting
operating expenses. This includes all the cash and non-cash incomes and expenditures.
Depending on the changes of rates in the previous year the rate of the operating income and
expenditures in the forecasted period has been assumed (Reid 2018). The cash items are
receipt from customer, interest received on lending and received from tenant, dividend and
distribution received. On the other side, the cash item under the operating expenses are
payment to supplier and employees, financing cost. The noncash items are depreciation and