Discounted Cash Flow (DCF) Analysis Unlevered

Microsoft Corporation (MSFT)

$ 288.49

-7.88 (-2.66%)

All numbers are in Millions, Currency in USD

Stock DCF: 274.61 | 288.49 | overvalue

Operating Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	89,950	110,360	125,843	143,015	168,088	196,619.77	229,994.61	269,034.60	314,701.36	368,119.73
Revenue (%)
EBITDA	34,149	49,468	58,056	68,423	85,134	89,428.18	104,608	122,364.48	143,135	167,431.17
EBITDA (%)
EBIT	25,371	39,207	46,374	55,627	73,448	72,031.61	84,258.48	98,560.77	115,290.77	134,860.58
EBIT (%)
Depreciation	8,778	10,261	11,682	12,796	11,686	17,396.57	20,349.52	23,803.71	27,844.23	32,570.59
Depreciation (%)

Balance Sheet Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Total Cash	132,981	133,768	133,819	136,527	130,334	215,648.63	252,253.49	295,071.77	345,158.15	403,746.36
Total Cash (%)
Account Receivables	19,792	26,481	29,524	32,011	38,043	45,016.17	52,657.35	61,595.57	72,050.99	84,281.14
Account Receivables (%)
Inventories	2,181	2,662	2,063	1,895	2,636	3,684.41	4,309.82	5,041.38	5,897.12	6,898.11
Inventories (%)
Accounts Payable	7,390	8,617	9,382	12,530	15,163	16,225.56	18,979.74	22,201.42	25,969.96	30,378.18
Accounts Payable (%)
Capital Expenditure	-8,129	-11,632	-13,925	-15,441	-20,622	-21,120.11	-24,705.11	-28,898.63	-33,803.97	-39,541.96
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 288.49
Beta	0.862
Diluted Shares Outstanding	7,608
Cost of Debt
Tax Rate	13.83
After-tax Cost of Debt	2.98%
Risk-Free Rate
Market Risk Premium
Cost of Equity	5.852
Total Debt	67,775
Total Equity	2,194,831.92
Total Capital	2,262,606.92
Debt Weighting	3.00
Equity Weighting	97.00
Wacc

Build Up Free Cash

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	89,950	110,360	125,843	143,015	168,088	196,619.77	229,994.61	269,034.60	314,701.36	368,119.73
EBITDA	34,149	49,468	58,056	68,423	85,134	89,428.18	104,608	122,364.48	143,135	167,431.17
EBIT	25,371	39,207	46,374	55,627	73,448	72,031.61	84,258.48	98,560.77	115,290.77	134,860.58
Tax Rate	8.40%	54.57%	10.18%	16.51%	13.83%	20.70%	20.70%	20.70%	20.70%	20.70%
EBIAT	23,239.31	17,812.67	41,652.53	46,444.29	63,292.63	57,123.19	66,819.45	78,161.59	91,428.98	106,948.41
Depreciation	8,778	10,261	11,682	12,796	11,686	17,396.57	20,349.52	23,803.71	27,844.23	32,570.59
Accounts Receivable	-	-6,689	-3,043	-2,487	-6,032	-6,973.16	-7,641.18	-8,938.22	-10,455.42	-12,230.15
Inventories	-	-481	599	168	-741	-1,048.41	-625.40	-731.56	-855.74	-1,001
Accounts Payable	-	1,227	765	3,148	2,633	1,062.56	2,754.18	3,221.68	3,768.54	4,408.22
Capital Expenditure	-8,129	-11,632	-13,925	-15,441	-20,622	-21,120.11	-24,705.11	-28,898.63	-33,803.97	-39,541.96
UFCF	23,888.31	10,498.67	37,730.53	44,628.29	50,216.63	46,440.63	56,951.46	66,618.57	77,926.61	91,154.11
WACC
PV UFCF						43,907.19	50,907.27	56,299.92	62,263.82	68,859.48
SUM PV UFCF										282,237.69

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	5.77
Free cash flow (t + 1)	92,977.20
Terminal Value	2,466,238.63
Present Value of Terminal Value	1,863,041.69

Intrinsic Value

Enterprise Value	2,145,279.38
Net Debt	56,027
Equity Value	2,089,252.38
Shares Outstanding	7,608
Equity Value Per Share	274.61