ROIC and Investment Valuation Excel Model
  • ROIC and Investment Valuation Excel Model
  • ROIC and Investment Valuation Excel Model
  • ROIC and Investment Valuation Excel Model
  • ROIC and Investment Valuation Excel Model
  • ROIC and Investment Valuation Excel Model
Originally published: 29/06/2020 16:58
Publication number: ELQ-27252-1
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ROIC and Investment Valuation Excel Model

This excel compares the efficiency of capital use between companies based on ROIC, reinvestment rate & multiples

Description
Do you need to compare several investment projects or public companies to invest in?

This spreadsheet compares three companies based on
1. Net Income
2. Percentage of Earnings Invested
3. Return on Invested Capital (ROIC) %
4. Price/Earnings Multiple - Entry & Exit


On Assumptions, when you insert the value for the above-mentioned criteria, net income and equity value forecasts are derived and returns are compared over the long-term by the company in the dynamic excel sheet

The returns are analysed using certain metrics to calculate Future Cashflow.

The incremental net income is calculated by Previous year Net income * Percentage of Earning invested * Return on Invested Capital (ROIC %).

This forecasts the future net income for the different companies.

As and when everything is inputted on to the excel, the model calculates the IRR and the multiple of the original investment.

In the end, you can then view and compare the different companies based on the metrics that we mentioned before.

A High IRR lets you predict that higher net cash flows for the companies.

A high IRR lets you estimate the profitability of future potential investments that you might inject into the company.

I would first advise you to get the relevant data for ROIC & IRR of the industry to compare the final result.

This Best Practice includes
1 Excel file

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