Tool V8 · Free

Returns & Reverse-Solve

A capital plan usually shows revenue and capital and stops, leaving the reader to wonder whether the numbers earn anything. This turns the question round. Given the revenue and the capital, it asks what you would have to believe: how much debt the cash flow will carry at the lender's covenant, what margin a given return needs, and what the business must be worth at the end for a hurdle rate to be met. It is arithmetic on your figures, built to be argued with.

Step 1

Capital and revenue

Five years of revenue and the capital deployed to earn it, in USD millions. Use the plan's own figures, not yours: the point is to test them.

Capital deployed (USD m)

Everything the plan spends before the operation earns: aircraft, acquisitions, facilities, working capital.

When the capital goes out

Spreading it lowers the exit value the return needs. The upper bound is the cautious reading.

Revenue, year 1

Year 2

Year 3

Year 4

Year 5

EBITDA margin (%)

The plan's own margin. If it states none, that is itself the finding. 22% is the JK planning default for a first-pass test, a house assumption and not a published benchmark.

Step 2

Debt and the return you need

Interest rate (% p.a.)

Repayment term (years)

Covenant floor (× cover)

Debt you plan to draw (USD m)

Return you need (% p.a.)

EBITDA yield you want on capital (%)

Step 3

Debt service cover, year by year

A facility sized to the final year's cash flow is repaid from every year's. This shows the cover in each, because debt that works at the end state can fail in the ramp.

Step 4

Cover in the final year, by debt and margin

Step 5

What the business must be worth

Cash flow over five years rarely repays the capital. The rest of the return has to come from what the business is worth at the end. This is that value for your hurdle and for two either side.

Step 6

How wrong can the inputs be?

Say how far you think revenue, margin and interest could miss. The first table moves each input alone and ranks them by how much the debt capacity swings. The second moves them together, 2,000 times, with the same seed every time, and reports the cautious (P10), middle (P50) and generous (P90) outcomes.

Revenue could miss by (±%)

Margin could miss by (± points)

Interest could miss by (± points)

Ranges are yours and are drawn as symmetric triangles around your figures, independently. If you have no view, the defaults are wide enough to be uncomfortable, which is the point.

Step 7

What this answer assumes

Every figure the tool supplied for you, with its grade and basis. If you changed one, the change is shown. A reader of a printed pack can then see which numbers are the plan's and which are ours.

What you would have to believe

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Enter the plan's revenue and capital.

Findings

Have JK build the investment case behind the numbers.

This tests a case in an afternoon. A JK engagement builds it: revenue tail by tail from actual hours and yield, funding structure and covenants, a downside case, and a 13-week and 24-month cash view the Board can approve capital against.

No email app? · info@aviationhubkenya.org

A test of an investment case, not a valuation, a forecast or investment advice. Figures are the ones you enter; nothing here is a benchmark unless it says so. Debt is a level payment (principal and interest) over the term, a first-pass sanity check and not a bankable model. Everything you enter stays in this browser.