A Spreadsheet Model to Determine the Historical Value Drivers of a Company

Abstract

Identifying the historical value drivers of a company proves extremely useful while valuing a company. Knowing why a company has done well (or poorly) in the past is very important to understand how the company is going to perform in the future. In this paper we suggest a spreadsheet model that can help one in identifying the relative importance of the different value drives for any company. Apart from helping one in determining the value drivers of a company, this model can also prove to be extremely useful while doing financial statements analysis. In this paper we develop a simple spreadsheet model and apply it to Titan Industries Limited, a leading watch maker from India, to understand how one can determine the value drivers. We find that operating profit margin is the value driver that has the largest impact on Titan's financial performance. However, sales growth rate has a marginally negative impact on the performance of Titan.

Keywords: Value drivers, EVA, FCF, spreadsheet models

JEL Classification: G12, G30, M40