ビスポークパートナー Company Profile

In the practice of corporate valuation, have you ever faced the question, "Why is there profit but no cash remaining?" The adjustment of working capital from NOPLAT in the DCF method is often treated merely as a calculation rule, but it is actually an important process related to the essence of corporate valuation. This column not only explains the calculation procedures but also focuses on the fundamental question of "why this adjustment is necessary." Specifically, it visualizes through numerical examples the mechanism by which "accounting profit" increases while "cash" decreases during sales expansion, and it also discusses the risk of overvaluation that is easy to fall into when evaluating growth companies. The working capital adjustment is not just a technique; it is a "philosophy" for reflecting the actual business situation in value. This is content that practitioners aiming to enhance the accuracy of their DCF models and achieve persuasive valuations should definitely read.

Business leaders are troubled by the fact that "stock prices are not being fairly evaluated," while investors hesitate because they "cannot see future growth." To bridge this gap, it is critically important to determine how to disclose information that supports future growth. We would like to continue exploring whether there is a role for professionals like us in this kind of CEO agenda.

In 2023, a major topic that shook the business world was the transfer of the department store subsidiary Sogo & Seibu by Seven & I Holdings (hereafter, 7&i HD) to an overseas investment fund. In response, the labor union of Sogo & Seibu conducted a historic strike for the first time in 61 years, shocking the industry. However, as 2024 approached, this series of events rapidly faded from public interest. What once sparked heated discussions eventually ceased to be a topic of everyday conversation, and opportunities for media coverage significantly decreased. Over time, this turmoil quietly but surely became a thing of the past. This time, I would like to explore the actual financial impact that the sale of "Sogo & Seibu" had on 7&i HD, based on the publicly disclosed materials from 7&i HD.