It is currently the end of 2023 , and you have been asked to determine the projected cash flows of your firm, Uber Technologies (symbol: UBER), next year for decision-making purposes. Below is some financial statement information that is loosely based on UBER for the fiscal year ended December 31, 2023:
Income Statement (in millions $)
Year Ended December 31, 2023
able[[Sales,36,000],[Cost of Sales,21,700],[Gross Income,14,300],[Selling, General, Administrative Expenses,7,400],[Research and Development,3,100],[Other Expenses,1,100],[Depreciation,800],[Interest Expense,630],[Pre-Tax Income,1,270],[Tax,270],[Net Income,1,000]]
a) Construct a pro-forma income statement for December 31, 2024. Management assumes that sales will grow by 15 percent next year, and that "Other Expenses" will remain unchanged. Also assume that net property, plant, and equipment at the end of 2022 is valued at $22,900M, net property, plant, and equipment at the end of 2023 is valued at $26,200M, long-term debt at the end of 2022 is $10,900M, and long-term debt at the end of 2023 is $10,600M.
b) Suppose that management plans to issue a special dividend of $1,500M and purchase $1,000M worth of new buildings and equipment in 2024. Using this information and numbers from part (a), calculate the following: (1) projected net, property, plant and equipment at the end of 2024, and (2) projected shareholders' equity at the end of 2024. Assume that shareholders' equity at the end of 2023 equals $8,500M.
c) Using numbers from parts (a) and (b), calculate the projected net funding need for UBER in 2024. Management projects that net working capital will increase by $200M in 2024.
d) What is the projected free cash flow in 2024? If the free cash flow is projected to grow at 3.5% per year in perpetuity, and the discount rate for these free cash flows is 9.0%, then what is the present value in 2023 of all UBER free cash flows?
Income Statement (in millions $) Year Ended December 31,2023
Sales Cost of Sales Gross Income Selling,General,Administrative Expenses Research and Development Other Expenses Depreciation Interest Expense Pre-Tax Income Tax Net Income
36,000 21,700 14,300 7,400 3,100 1,100 800 630 1,270 270 1,000
a)Construct a pro-forma income statement for December 31, 2024. Management assumes that sales will grow by 15 percent next year,and that "Other Expenses"will remain unchanged. Also assume that net property, plant, and equipment at the end of 2022 is valued at $22,900M, net property, plant, and equipment at the end of 2023 is valued at $26,200M, long-term debt at the end of 2022 is $10,900M, and long-term debt at the end of 2023 is $10,600M.
b)Suppose that management plans to issue a special dividend of $1,500M and purchase $1,000M worth of new buildings and equipment in 2024. Using this information and numbers from part (a), calculate the following:(1)projected net,property,plant and equipment at the end of 2024,and (2) projected shareholders' equity at the end of 2024. Assume that shareholders' equity at the endof2023equals$8,500M
c)
Using numbers from parts (a) and (b), calculate the projected net funding need for UBER in 2024. Management projects that net working capital will increase by $200M in 2024.
d)What is the projected free cash flow in 2024? If the free cash flow is projected to grow at 3.5% per year in perpetuity, and the discount rate for these free cash flows is 9.0%, then what is the present value in 2023 of all UBER free cash flows?
