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The following are extracted from the financial statements of Frem, Inc., for 2006, 2005, and 2004. 2004 2006 $233,000 (124, 000) (95,000) 2005 $204,000 (110,000) (81,500) Net sales Cost of sales Selling and administrative expenses Other income (expense): Interest Other Earnings before tax and extraordinary credit Provision for income tax Earnings before extraordinary credit Extraordinary credit (3,700) 100 $ 10,400 (4,800) 5,600 (3,050) 1,175 $ 10, 625 (4,740) 5,885 1,510 $7.395 S 5.600 Total assets Current liabilities Long-term debt Total liabilities Common equity Preferred stock Total equity Total liabilities and equity $202,000 50,400 24, 600 75,000 123,000 4,000 127,000 $202,000 $173,000 34,800 17,400 52,200 116, 800 4,000 120, 800 $173,000 $161,000 29,000 15,200 44,200 112,800 4,000 116, 800 $161,000 What is book value in 2006In 2005? In 2004? Assume depreciation and amortization expense of $11,000 in 2006 and 87,000 in 2005. What is EBITDA for 2006? For 2005? Ignore the extraordinary credit in your calculations. What multiple of EBITDA do you believe is suitable to value this business, and why? What would you determine the value of this business to be at the end of 20062 20052 Financial statements of Woodstock Manufacturing Company appear below (note amounts in thousands): 2005 2004 Balance Sheet April 30 (in thousands of dollars) 2006 Assets Current assets $ 1,700 Plant and equipment (net) 8,110 Other assets 1,004 Total assets 510,814 Liabilities and Stockholders Equity Current liabilities $ 950 Long-term liabilities 2,023 Capital stock ($10 par) 4,600 Paid-in capital in excess of par 770 Retained earnings 2-421 Total liabilities and stockholders' equity $10.914 $1,120 7,830 695 $9.545 $1,544 5,404 272 57720 980 1,591 4,600 770 1.804 19,645 6772 1,544 3,000 386 2,018 $2720 Net sales Cost of sales Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Interest expense Net income before tax Income taxes Net income Income Statement For the Year Ended April 30 (in thousands of dollars) 2006 $38, 610 25, 100 413, 510 7,700 4270 $11.970 5 1.540 115 $ 1,425 655 720 2005 $32,175 19,950 $12,225 6,565 4 175 510-240 $ 1,485 95 $ 1,390 645 745 2004 $25,740 15.400 $10,340 5,148 3961 691009 $1,331 100 $1,231 543 690 What is book value in 2006? In 2003? In 2004? Note that numbers in financial statements are in thousands Assume depreciation and amortization expense of $811,000 in 2006 and $783,000 in 2005. What is EBITDA for 2006? For 2005? What multiple of EBITDA do you believe is suitable to valve this business, and why? What would you determine the value of this business to be at the end of 2006 2005? The following information is computed from Fast Food Chain's annual report for 2006. Current assets Property and equipment, net Intangible assets, at cost less applicable amortization 2006 $ 2,731,020 10,960,286 2005 $ 2,364,916 8,516, 833 294,775 513,986,091 255,919 $11, 137, 669 Current liabilities Deferred federal income taxes Mortgage note payable Stockholders' equity $ 2,210, 735 26,000 $ 3,168,123 160,000 456,000 10,201,958 $13,986,081 B, 900, 933 511, 137 662 Net sales Cost of goods sold Selling and administrative expense Interest expense Income tax expense Net income $33,410,599 $25,004,285 (30,168,715) (23, 159,745 (2,000,000) (1,500,000) (216,936) (39,456) (400,000) (300,000 524.94 6 B05, 084 What is book value in 2006? In 2005 Assume depreciation and amortization expense of $1,096,029 in 2006 and $851,683 in 2005. What is EBITDA for 2006? For 2005? What multiple of EBITDA do you believe is suitable to value this business, and why? What would you determine the value of this business to be at the end of 2006 2005