Song, Allen J.
Chipotle Mexican Grill, Inc. is a restaurant that develops and operates fastcasual, fresh Mexican food chains in the United States, Canada, the United Kingdom,
and France. The firm primarily offers burritos, tacos, burr
Cost of Sales
Gross Operating Profit
Selling, General & Admin. Expense
Income Taxes 40%
Net Income from Operations
Total Common Shares Outstanding
Analysis of Financial
Questions We Want to Answer
What are the assets that the firm has in place
already, and how much are they worth?
What are the growth assets of the firm and
what is their value?
What is the firm earning on its assets in
CAPITAL BUDGETING WORKSHEET
INPUT SHEET: USER ENTERS ALL BOLD NUMBERS
Revenues in year 1=
Opportunity cost (if any)=
Var. Expenses as % of Rev=
Dividend Discount Models
Two basic inputs: Expected dividends and
the cost of equity
To obtain expected dividends, need to
make assumption about expected growth
rates in earnings and payout ratios.
The cost of equity is based o
Price multiples are ratios of a stocks market
price to some measure of value per share. A
price multiple summarizes in a single number a
valuation relationship to a familiar quantity such
Relative Values or Earnings
The Essence of relative
In relative valuation, the value of an asset is compared to the values
assessed by the market for similar or comparable assets.
To do relative valuation then,
Need to identify compa
Market Efficiency- Definition,
Tests, and Evidence
Prior to the 1950s it was generally believed that the use
of fundamental or technical approaches could beat the
market (though technical analysis has always been
seen as something akin to voodoo)
First Year of Investment
Taxation & Amortisation
Name of Investment
Company/Business Tax Rate
Goodwill Amort (Yrs)
Song, Allen J.
*Cost of Debt from Bond Info via Yahoo! Finance
*Tax from Income Statement via Yahoo! Finance
1. The market value of Charcoal Corporation's common stock is $20 million, and the market value of its riskfree debt is $5 million. The beta of the company's common stock is 1.25, and the market risk premium is
8%. If the treasury bill rate is 5%, w
ESTIMATING THE WEIGHTED AVERAGE COST OF CAPITAL
Input cells are in yellow.
Amount of equity
Amount of debt