WAL-MART STORES, INC.
Table of Contents
Valuation Methods Used
* Legal Disclaimer
This valuation is subject to the following assumptions and limiting conditions:
1. Information, estimates, and opinions contained in this report are obtained from sources considered to be reliable. However, we assume no liability for such sources.
2. Wal-Mart Stores, Inc. and its representatives warranted to us that the information they supplied was complete and accurate to the best of their knowledge and that the financial statement information reflects Wal-Mart Stores, Inc.’s results of operations and financial condition in accordance with generally accepted accounting principles, unless otherwise noted. Information supplied by management has been accepted as correct without further verification, (and we express no opinion on that information).
3. Possession of this report, or a copy thereof, does not carry with it the right of publication of all or part of it, nor may it be used for any purpose by anyone but the client without the previous written consent of the client or us and, in any event, only with proper attribution.
4. We are not required to give testimony in court, or be in attendance during any hearings or depositions, with reference to Wal-Mart Stores, Inc. being valued, unless previous arrangements have been made.
5. The various estimates of value presented in this report apply to this valuation only and may not be used out of the context presented herein. This valuation is valid only for the purpose or purposes specified herein.
6. The valuation contemplates facts and conditions existing as of the valuation date, 13th February 2013. Events and conditions occurring after that date have not been considered, and we have no obligation to update our report for such events and conditions.
7. We have assumed that there is full compliance with all applicable federal, state, and local regulations and laws unless otherwise specified in this report.
8. This report was prepared by professionals who do not have any present or contemplated future interest in Wal-Mart Stores, Inc., any personal interest with respect to the parties involved, or any other interest that might prevent us from performing an unbiased valuation. Our compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report.
* Executive Summary
1 Company Overview
2 Valuation Methods Used
3 Fundamental Valuation
4 Market Valuation
5 Liquidation Value
Fundamental Method: Discounted Cash Flows
The Fundamental Method consists in calculating the cash flows the company will produce in the future and discounting them to the present in order to determine the present value of the company. We will estimate these cash flows by removing other expenses, financial expenses (expenses unrelated with the main activity of the business) as they are amounts that can make distortions in the result and drive us to get a negative enterprise value. After we calculate the value of the Cash Flows, we adjust the Tax Expense so it reflects the charge of the adjusted profit that does not include the unrelated expenses. The value we get here is the NOPLAT (Net Operating Profit Less Adjusted Taxes). By adding Depreciation, Amortization and removing Investments of the year (either in capital expenditures and non cash working capital) we get the Free Cash Flow. We make a forecast of the Free Cash Flows for a specific amount of periods until the company grows at a stable growth rate. Reached this level we take the NOPLAT of the last period and we divide it by the WACC (Weighted Average Cost of Capital) in order to calculate the Terminal Value. This value refers to the value...
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