Justification Assumptions |
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Justification Assumptions |
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The Justification Assumptions worksheet sets the financing terms for an acquisition of the business and the parameters for the post-sale cash flow.
The inputs in the Financing section should all be self-explanatory: you enter amounts, terms, and interest rates for the three sources of financing. When you're done, click on the Calculate Now button to update the worksheet.
Financing Inputs
The inputs in the Post-Sale Cash Flow section set the parameters for projected cash flow following the sale. The results of these calculations appear on the Post-Sale Cash Flow Worksheet.
•Discretionary Income comes from the Earnings Worksheet. The First Year Income Growth rate is applied to this amount.
•You can choose to deduct a manager's salary from the cash flow. The salary amount comes from the third question on the Questionnaire.
•The growth and tax rate inputs should all be self-explanatory.
•The Investment Hurdle Rate is the required rate of return on the acquisition of this business. The Sanity Check worksheet calculates if this rate was met.
Post-Sale Cash Flow Inputs
