In January 2021, Alphabet (Google) finally closed on its acquisition of Fitbit Inc (FIT) for $7.35...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
In January 2021, Alphabet (Google) finally closed on its acquisition of Fitbit Inc (FIT) for $7.35 per share or roughly $2,100 million, after announcing the transaction in November 2019. Fitbit has sold more than 100 million devices, supporting over 29 million active users globally. Growth in wearabes is anticipated to be 8.0% per annum through 2030. In 2019, despite revenues exceeding $1.4 billion, Fitbit generated negative cash flows. With Alphabet's resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster, and improve efficiencies. Alphabet therefore expects cash flows to be a modest $30 million in the following year. Google's cost of capital is 10.0%. 1. Based on the data provided above, what is the present value of future cash flows in acquiring Fitbit? Do you agree with Google's decision to acquire Fitbit? Why? (show calculations; 10 points) [PV = CF1 / (r- g)] 2. Using the exhibit below, assess the performance of Fitbit. Does this change your decision to acquire? (support answer with financial ratios; 10 points) 3. Based on course content, what can Alphabet do to avoid problems in acquisitions in general? Briefly describe. (10 points) Fitbit - Select financial information, 2017-19 Figues in S000s 2019 2018 2017 Figues in S000s 2019 2018 2017 Revene 1,434,788 1,511,983 1,615,519 Total current assets 1,119,752 1,311,811 1,384365 Cost of revenue Gross profit 1,007,116 908 404 924,618 PPE, net 82,756 106,286 104,908 427,672 603,579 690,901 Other assets 165,578 1,368,086 1,515,547 1,582,075 97,450 92,802 R&D expense Saks & marketing Total Assets 300,354 329,800 332,169 343,012 344,091 415,042 Total curent liabilities 764,610 719,383 60,226 701,300 General & admiristratve Change in consideration 118,231 116,627 133,934 Other liabilities 116,213 880,823 56,812 758,112 Total Liablities 779,609 Operating income Other income, net Income tax expense (320,713) (189,308) (201,087) Sharcholders' equity 487,263 735,938 823,963 11,648 5,166 1,687 6,443 11,646 82,548 Net income (320,711) (185,829) (277,192) In January 2021, Alphabet (Google) finally closed on its acquisition of Fitbit Inc (FIT) for $7.35 per share or roughly $2,100 million, after announcing the transaction in November 2019. Fitbit has sold more than 100 million devices, supporting over 29 million active users globally. Growth in wearabes is anticipated to be 8.0% per annum through 2030. In 2019, despite revenues exceeding $1.4 billion, Fitbit generated negative cash flows. With Alphabet's resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster, and improve efficiencies. Alphabet therefore expects cash flows to be a modest $30 million in the following year. Google's cost of capital is 10.0%. 1. Based on the data provided above, what is the present value of future cash flows in acquiring Fitbit? Do you agree with Google's decision to acquire Fitbit? Why? (show calculations; 10 points) [PV = CF1 / (r- g)] 2. Using the exhibit below, assess the performance of Fitbit. Does this change your decision to acquire? (support answer with financial ratios; 10 points) 3. Based on course content, what can Alphabet do to avoid problems in acquisitions in general? Briefly describe. (10 points) Fitbit - Select financial information, 2017-19 Figues in S000s 2019 2018 2017 Figues in S000s 2019 2018 2017 Revene 1,434,788 1,511,983 1,615,519 Total current assets 1,119,752 1,311,811 1,384365 Cost of revenue Gross profit 1,007,116 908 404 924,618 PPE, net 82,756 106,286 104,908 427,672 603,579 690,901 Other assets 165,578 1,368,086 1,515,547 1,582,075 97,450 92,802 R&D expense Saks & marketing Total Assets 300,354 329,800 332,169 343,012 344,091 415,042 Total curent liabilities 764,610 719,383 60,226 701,300 General & admiristratve Change in consideration 118,231 116,627 133,934 Other liabilities 116,213 880,823 56,812 758,112 Total Liablities 779,609 Operating income Other income, net Income tax expense (320,713) (189,308) (201,087) Sharcholders' equity 487,263 735,938 823,963 11,648 5,166 1,687 6,443 11,646 82,548 Net income (320,711) (185,829) (277,192)
Expert Answer:
Answer rating: 100% (QA)
To solve this question just input those variables which are to be used in logistic regression as the ... View the full answer
Posted Date:
Students also viewed these accounting questions
-
Do you agree with upscale retailers' decision not to provide in-store shopping carts? What realistic alternatives would you suggest? Explain your answers.
-
Do you agree with Warby Parker's decision to open showrooms inside trendy boutiques in addition to operating on the Internet? Explain your answer.
-
Do you agree with the courts decision in the Stoneridge case?
-
Remove left recursion in the following grammar. Show each step. Hint: First remove direct left recursion. Then the indirect left recursion. A AB | Aab | BA| a Bb | | b
-
The homeownership rate in the United States was 67.4% in 2009. In order to determine if homeownership is linked with income, 2009 state level data on the homeownership rate (Ownership) and median...
-
It has been suggested that Atlanta?Fulton County Stadium earned the nickname ?The Launching Pad? because baseballs carried farther than normal in the region?s hot, humid atmosphere. With this...
-
A constructive partnership between the chair and the chief executive is vital to every nonprofit. Why is this true or does it always matter?
-
After Susan Wong graduated from State University with a degree in management science, she went to work for a computer systems development firm in the Washington, DC, area. As a student at State,...
-
Which is a crucial element of the budget? a. Sales forecast. b. None are correct. c. Expenditure. d. A and B are correct
-
XYZ is a calendar-year corporation that began business on January 1, 2018. For the year, it reported the following information in its current-year audited income statement. Notes with important tax...
-
Given the proforma below, solve for the answers using Excel and provide the necessary explanations. Rent Vacancies EGI Pro forma year2 year1 year3 year4 year5 $ 2,125,000.00 $2,210,000.00...
-
The bubble sort algorithm can be written like this: void bubblesort (int* A, int n) { for (int i=0; i
-
Please provide feedback to Carla: "Good evening Professor and all, I have never had a gig job but I do understand the reason why folks would work for companies like these. I live in the Bahamas where...
-
Unemployment and the Labor Market End of Chapter Problem S The steady-state rate of unemployment is Suppose that the unemployment rate does not begin at this level. Use this s+f relationship to show...
-
(a) A 10.0-g bullet is fired into a stationary block of wood (m = 5.00 kg). The bullet gets embedded in the wood, and the speed of the wood-and-bullet combination immediately after the collision is...
-
On January 30, a company that designs and builds generators to standard industrial specifications received a telephone call from a buyer who ordered two generators at a price of $25,000 each. The...
-
Where (for what values of a) does the rational function have (a) holes? (b) vertical asymptotes? Entry tip: Enter DNE if none. f(x)=-37- (x+28)(x+74) (x + 64)(x + 74)(x+8)
-
Calculate the electrical conductivity of a fiber-reinforced polyethylene part that is reinforced with 20 vol % of continuous, aligned nickel fibers.
-
Prove or disprove. A directed graph is a tree if and only if it is connected and has no directed cycles.
-
Prove or disprove. A directed graph is a tree if and only if it is quasi-connected and has no directed cycles.
-
Would the directed spanning tree algorithm also find an undirected spanning tree if the given graph was connected and undirected? Explain.
Study smarter with the SolutionInn App