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Market Multiple Valuation: An Illustration of Microsoft

Market Multiple Valuation: An Illustration of Microsoft. Di (Wendy) Wang. Use of Market Multiples. Steps to Using Multiples. Valuation Using Balance Sheet Multiples. Valuation Using a NEA Multiple. Exclude ACN because of its negative NEA. Valuation Using a Book Value Multiple.

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Market Multiple Valuation: An Illustration of Microsoft

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  1. Market Multiple Valuation: An Illustration of Microsoft Di (Wendy) Wang

  2. Use of Market Multiples

  3. Steps to Using Multiples

  4. Valuation Using Balance Sheet Multiples

  5. Valuation Using a NEA Multiple Exclude ACN because of its negative NEA

  6. Valuation Using a Book Value Multiple

  7. Valuation Using Income Statement Multiples

  8. Valuation Using an EPAT Multiple

  9. Valuation Using an EPAT from Sales Multiple

  10. Valuation Using a Net Income Multiple

  11. Valuation Using a Comprehensive Income Multiple

  12. Valuation Using a Sales Multiple

  13. Valuation Using the Ratio of (Price-Book) to R&D

  14. Combining Estimates from Differing Multiples • Closing price on Jan 24, 2014: $36.81/share Recommendation: To Buy

  15. Confidence in the Valuation Method Caution: Circularity-Assuming comparables are fairly valued, but valued company is not

  16. Sources: • Microsoft Form10-K For the Fiscal Year Ended June 30, 2011 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=8062497 • Microsoft Form10-K For the Fiscal Year Ended June 30, 2012 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=8733512 • Microsoft Form10-K For the Fiscal Year Ended June 30, 2013 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=9422625

  17. THANK YOU!

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