My model isn't balancing.. I think it has something to do with my minimum cash balance or my bank revolver.
Can someone please help me figure this out.. I just spent 4 hours trying to and I gave up at this point.
Thank you!
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| model.xls 208.5 KB | 208.5 KB |
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1) 'Cash Flow Statement' tab "Excess over/(under) Minimum Cash Balance" - row 20 It should be calculated as BOP cash + FCF - Min Cash. Think BOP cash item is linking incorrectly
2) 'Balance Sheet' tab "Notes Payable" - row 20 Flatline the 416 figure from 2016 to 2020
Should balance after that
A couple things stick out:
Investor thoughts: What is the purpose of this model? Practice or valuation? Either way, I'd encourage you to make better assumptions. What is General Mills going to do over the next year or too that's going to a) increase growth, b) slow down COGS growth and c) greatly increase EBIT/EBITDA YoY? Cost of capital is way too low. Let me ask you this, would you be okay with owning GM and getting a 4.5% return? That's what you're saying when you use a 4.5% CoC. I tossed in 7% and it gave me a value lower than today, and I would never make an investment decision off 7%, no matter how mature the company.
Your SG&A also makes no economic sense.
Model specifics: a) Current LT is not going to be straightlined. You need to project it out since you have all of the loan data. b) Your revolver is likely going to be 80% of AR and Inventory so a revolver value over 3B is not going to happen. c) Depreciation is wrong. You're projecting a big change increase in CAPEX but lower depreciation? That makes no sense. I would go back and calculated depreciation as a % of CAPEX and see if that's a pretty constant percentage. d) You could project out DTLs or just use it as a plug if you're close. Could also use NP as a plug.
It does balance if you do what dukebanker said, but your cash goes negative and since you have a true minimum over 1.75B, that's really bad.
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