16. Corgi Corp. had the following operating results for 2020 & 2019. Corgi Corp. paid dividends...

  

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16. Corgi Corp. had the following operating results for 2020 & 2019. Corgi Corp. paid dividends of $80,000 per year for both years and made capital expenditures of $230,000 in both years. The company's stock price in 2019 was $14.20 and $12.50 in 2020. In 2020, the industry average earnings multiple was 8 and the free cash flow and sales multiples were 7 and 1.35, respectively. The company is publicly owned and has 450,000 shares of outstanding stock at the end of 2020. Balance Sheet, Dec 31, 2020 $ 397,710 $ 209,700 $ 409,700 $ 1,017,110 1,773,870 $ 2,790,980 $ 610,445 2019 $ 200,000 $ 425,000 $ 300,000 $ 925,000 2,000,000 $ 2,925,000 $ 500,000 Cash Accounts Receivable Inventory Total Current Assets Long-lived Assets Total Assets Current Liabilities Long-term Debt Shareholder Equity 644,425 600,000 1,536,000 1,825,000 Total Debt and Equity $ 2,790,870 $ 2,925,000 Income Statement, for year ended Dec 31. 2020 $ 3,800,000 2,280,000 1,520,000 2019 $ 3,040,000 1,976,000 Sales Cost of Sales Gross Margin Operating Expenses 1,064,000 912,000 533,280 Operating Income 608,000 530,720 Тахes 243,200 $ 364,800 212,288 $ 318,432 Net Income Cash Flow From Operations 2020 2019 $ 318,432 165,000 Net Income $ 364,800 Plus Depreciation Expense + Decrease (-inc) in AccRec. and Inv. + Increase (-dec) in Cur. Liabl. 165,000 105,600 110,445 Cash Flow from Operations $ 745,845 $ 483,432 a. Calculate the 2020 value of the company using the earnings multiple. b. Calculate the 2020 value of the company using the free cash flow multiple c. Calculate the 2020 book value of the company's equity. d. Calculate the 2020 market value of the company. e. Compare Corgi's Equity Book Value (c.) to the Market Value (d.). Discuss conceptually (not differences in the calculations) the difference between these two amounts. 16. Corgi Corp. had the following operating results for 2020 & 2019. Corgi Corp. paid dividends of $80,000 per year for both years and made capital expenditures of $230,000 in both years. The company's stock price in 2019 was $14.20 and $12.50 in 2020. In 2020, the industry average earnings multiple was 8 and the free cash flow and sales multiples were 7 and 1.35, respectively. The company is publicly owned and has 450,000 shares of outstanding stock at the end of 2020. Balance Sheet, Dec 31, 2020 $ 397,710 $ 209,700 $ 409,700 $ 1,017,110 1,773,870 $ 2,790,980 $ 610,445 2019 $ 200,000 $ 425,000 $ 300,000 $ 925,000 2,000,000 $ 2,925,000 $ 500,000 Cash Accounts Receivable Inventory Total Current Assets Long-lived Assets Total Assets Current Liabilities Long-term Debt Shareholder Equity 644,425 600,000 1,536,000 1,825,000 Total Debt and Equity $ 2,790,870 $ 2,925,000 Income Statement, for year ended Dec 31. 2020 $ 3,800,000 2,280,000 1,520,000 2019 $ 3,040,000 1,976,000 Sales Cost of Sales Gross Margin Operating Expenses 1,064,000 912,000 533,280 Operating Income 608,000 530,720 Тахes 243,200 $ 364,800 212,288 $ 318,432 Net Income Cash Flow From Operations 2020 2019 $ 318,432 165,000 Net Income $ 364,800 Plus Depreciation Expense + Decrease (-inc) in AccRec. and Inv. + Increase (-dec) in Cur. Liabl. 165,000 105,600 110,445 Cash Flow from Operations $ 745,845 $ 483,432 a. Calculate the 2020 value of the company using the earnings multiple. b. Calculate the 2020 value of the company using the free cash flow multiple c. Calculate the 2020 book value of the company's equity. d. Calculate the 2020 market value of the company. e. Compare Corgi's Equity Book Value (c.) to the Market Value (d.). Discuss conceptually (not differences in the calculations) the difference between these two amounts.

Answer rating: 100% (QA)

a multiple earnings 1542 b free CF multiple 4173 c equity BV 1536110 d Market value 5625000 e Refer ... View the full answer