• June 7, 2018
• David Marks
• 0

# KIMBERLY-CLARK CORPORATION

PV of Cv are to be calculated by the formula of FCTT +1 / ( R-g)  where free cash flow for the last year is taken and r is the discount rate and the expected growth rate is also taken for doing the calculation. In this case, also enterprise value at \$ 18189 is calculated after adjusting the growth rate and discount rate

# Question 2: Free cash flow in Kimberly- Clark Corporation

Reformulation of balance sheet

 Particulars 2007 2006 Operating assets \$ 18057.0 \$ 16796.2 Operating liabilities 6011.80 5927.20 Financial assets( operating assets – operating liabilities ) \$ 18057.0 -\$ 6011.80= \$ 12045.20 ( \$ 16796.2-5927.20) \$ 10869 Financial obligations 6496.40 \$ 4395.40 Financial assets Less: 382.70 6113.70 270.80 4395.40 Common equity ( CSE) ( net operating assets – financial assets) – ( 12045.20- 6113.70)= \$ 5931.50 (\$ 10869-4124.60= \$ 6744.40.

Table 2: Free cash flow

(Source: created by author)

By the method type 1:

Free cash flow = \$ operating income – change in the net operating assets

= \$ 2740.1 – (12045.20-10869.0) \$ 1563.90

By the method type 2,

Free cash flow = \$ operating income – change in the net operating assets

= 147.1 – (6113.70 – 4124.60) + 3405.90

= \$ 1563.90

Net payout to the shareholders (D) = comprehensive income – NFO + d

= (2740.1 -147.1) – (- 812.90)

= \$ 3405.90

KIMBERLY-CLARK CORPORATION

Table 1: Free cash flow

(Source: created by author)

Calculation of continuing value (No growth)

Value per share on 369 million shares = \$ 32.82 (12112/369) = \$ 32.8238

1637 /0.09 = \$ 18189

PV of CV = 18189/1.4116= 12885

PV of Cv are to be calculated by the formula of FCTT +1 / ( R-g)  where free cash flow for the last year is taken and r is the discount rate and the expected growth rate is also taken for doing the calculation. In this case, also enterprise value at \$ 18189 is calculated after adjusting the growth rate and discount rate

# Question 2: Free cash flow in Kimberly- Clark Corporation

Reformulation of balance sheet

 Particulars 2007 2006 Operating assets \$ 18057.0 \$ 16796.2 Operating liabilities 6011.80 5927.20 Financial assets( operating assets – operating liabilities ) \$ 18057.0 -\$ 6011.80= \$ 12045.20 ( \$ 16796.2-5927.20) \$ 10869 Financial obligations 6496.40 \$ 4395.40 Financial assets Less: 382.70 6113.70 270.80 4395.40 Common equity ( CSE) ( net operating assets – financial assets) – ( 12045.20- 6113.70)= \$ 5931.50 (\$ 10869-4124.60= \$ 6744.40.

Table 2: Free cash flow

(Source: created by author)

By the method type 1:

Free cash flow = \$ operating income – change in the net operating assets

= \$ 2740.1 – (12045.20-10869.0) \$ 1563.90

By the method type 2,

Free cash flow = \$ operating income – change in the net operating assets

= 147.1 – (6113.70 – 4124.60) + 3405.90

= \$ 1563.90

Net payout to the shareholders (D) = comprehensive income – NFO + d

= (2740.1 -147.1) – (- 812.90)

= \$ 3405.90

KIMBERLY-CLARK CORPORATION

Table 1: Free cash flow

(Source: created by author)

Calculation of continuing value (No growth)

Value per share on 369 million shares = \$ 32.82 (12112/369) = \$ 32.8238

1637 /0.09 = \$ 18189

PV of CV = 18189/1.4116= 12885

PV of Cv are to be calculated by the formula of FCTT +1 / ( R-g)  where free cash flow for the last year is taken and r is the discount rate and the expected growth rate is also taken for doing the calculation. In this case, also enterprise value at \$ 18189 is calculated after adjusting the growth rate and discount rate

# Question 2: Free cash flow in Kimberly- Clark Corporation

Reformulation of balance sheet

 Particulars 2007 2006 Operating assets \$ 18057.0 \$ 16796.2 Operating liabilities 6011.80 5927.20 Financial assets( operating assets – operating liabilities ) \$ 18057.0 -\$ 6011.80= \$ 12045.20 ( \$ 16796.2-5927.20) \$ 10869 Financial obligations 6496.40 \$ 4395.40 Financial assets Less: 382.70 6113.70 270.80 4395.40 Common equity ( CSE) ( net operating assets – financial assets) – ( 12045.20- 6113.70)= \$ 5931.50 (\$ 10869-4124.60= \$ 6744.40.

Table 2: Free cash flow

(Source: created by author)

By the method type 1:

Free cash flow = \$ operating income – change in the net operating assets

= \$ 2740.1 – (12045.20-10869.0) \$ 1563.90

By the method type 2,

Free cash flow = \$ operating income – change in the net operating assets

= 147.1 – (6113.70 – 4124.60) + 3405.90

= \$ 1563.90

Net payout to the shareholders (D) = comprehensive income – NFO + d

= (2740.1 -147.1) – (- 812.90)

= \$ 3405.90

KIMBERLY-CLARK CORPORATION

Table 1: Free cash flow

(Source: created by author)

Calculation of continuing value (No growth)

Value per share on 369 million shares = \$ 32.82 (12112/369) = \$ 32.8238

1637 /0.09 = \$ 18189

PV of CV = 18189/1.4116= 12885

PV of Cv are to be calculated by the formula of FCTT +1 / ( R-g)  where free cash flow for the last year is taken and r is the discount rate and the expected growth rate is also taken for doing the calculation. In this case, also enterprise value at \$ 18189 is calculated after adjusting the growth rate and discount rate

# Question 2: Free cash flow in Kimberly- Clark Corporation

Reformulation of balance sheet

 Particulars 2007 2006 Operating assets \$ 18057.0 \$ 16796.2 Operating liabilities 6011.80 5927.20 Financial assets( operating assets – operating liabilities ) \$ 18057.0 -\$ 6011.80= \$ 12045.20 ( \$ 16796.2-5927.20) \$ 10869 Financial obligations 6496.40 \$ 4395.40 Financial assets Less: 382.70 6113.70 270.80 4395.40 Common equity ( CSE) ( net operating assets – financial assets) – ( 12045.20- 6113.70)= \$ 5931.50 (\$ 10869-4124.60= \$ 6744.40.

Table 2: Free cash flow

(Source: created by author)

By the method type 1:

Free cash flow = \$ operating income – change in the net operating assets

= \$ 2740.1 – (12045.20-10869.0) \$ 1563.90

By the method type 2,

Free cash flow = \$ operating income – change in the net operating assets

= 147.1 – (6113.70 – 4124.60) + 3405.90

= \$ 1563.90

Net payout to the shareholders (D) = comprehensive income – NFO + d

= (2740.1 -147.1) – (- 812.90)

= \$ 3405.90

### David Marks

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