Prepare a economic balance sheet based on the exhibit that is attached below. Its share price is
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Balance Sheet-Assets Cash balance..... Accounts receivable. Inventory.... Total current assets. Net property, plant and equipment... Total assets....... Income Statement Revenue.. Cost of goods sold. Gross margin Selling, general and administrative... Operating income..... Interest expense.. Income before taxes. . Income tax expense... Net income... LO2 Understand the principles underpinning the commonly used valuation methods Exhibit may contain small rounding errors THE MARKET VALUE COMPANY Income Statement and Balance Sheet Ferns Year 0 Year-1 $ 171.4 S 188.5 571.2 628.3 315.2 286.5 $1,029.1 $1,132.0 7,539.4 8,567.5 $8,568.5 $9,699.5 = $3,472.0 $3,769.7 -1,473.6 -1,621.0 $1,953.4 $2,148.7 -479.8 -527.8 $1,473.6 $1,621.0 -307.0 -384.0 $1,166.6 $1.237.0 -443.3 -470.0 $ 766.9. $723.3 Balance Sheet-Liabilities & Equity Accounts payable... Other current operating liabilities.... Total current liabilities. Debt Total liabilities. Common stock. Retained earnings Total shareholders' equity Total liabilities and equities. Solution on pages 34-35. Year O S 122.8 S 135.1. 119.9 131.9 $ 242.7 $267.0 4,800.0 5,200.0 $5,042.7 $5,467.0 $1,802.4 $1,802.4 1,723.3 2,430.0 $3,525.7 $4,232.4 $8,568.5 $9,699.5 1.3 VALUATION PRINCIPLES An asset has value to an investor because the investor believes the asset will generate cash flows in the future. The value of an asset depends on the magnitude, timing, and risk of the cash flows the investor expects it to generate. Holding everything else constant, the value of an asset increases if the magnitude. of its expected cash flows increases, if its expected cash flows arrive sooner, or if its risk (risk-adjusted discount rate) decreases. As we discuss below, the discounted cash flow (DCF) valuation model directly results from these valuation principles. Valuation Key 1.2 The value of an asset depends on the magnitude, timing, and risk of the cash flows (called free cash flows) the investor expects it to generate. The discounted cash flow (DCF) valuation model directly results from these valuation principles. Introduction to Measuring Free Cash Flows The DCF model measures the value of an asset as the sum of the expected cash flows the asset gener- ates after adjusting each expected cash flow for its timing and risk. In the context of the valuation of 6 in ST in in Balance Sheet-Assets Cash balance..... Accounts receivable. Inventory.... Total current assets. Net property, plant and equipment... Total assets....... Income Statement Revenue.. Cost of goods sold. Gross margin Selling, general and administrative... Operating income..... Interest expense.. Income before taxes. . Income tax expense... Net income... LO2 Understand the principles underpinning the commonly used valuation methods Exhibit may contain small rounding errors THE MARKET VALUE COMPANY Income Statement and Balance Sheet Ferns Year 0 Year-1 $ 171.4 S 188.5 571.2 628.3 315.2 286.5 $1,029.1 $1,132.0 7,539.4 8,567.5 $8,568.5 $9,699.5 = $3,472.0 $3,769.7 -1,473.6 -1,621.0 $1,953.4 $2,148.7 -479.8 -527.8 $1,473.6 $1,621.0 -307.0 -384.0 $1,166.6 $1.237.0 -443.3 -470.0 $ 766.9. $723.3 Balance Sheet-Liabilities & Equity Accounts payable... Other current operating liabilities.... Total current liabilities. Debt Total liabilities. Common stock. Retained earnings Total shareholders' equity Total liabilities and equities. Solution on pages 34-35. Year O S 122.8 S 135.1. 119.9 131.9 $ 242.7 $267.0 4,800.0 5,200.0 $5,042.7 $5,467.0 $1,802.4 $1,802.4 1,723.3 2,430.0 $3,525.7 $4,232.4 $8,568.5 $9,699.5 1.3 VALUATION PRINCIPLES An asset has value to an investor because the investor believes the asset will generate cash flows in the future. The value of an asset depends on the magnitude, timing, and risk of the cash flows the investor expects it to generate. Holding everything else constant, the value of an asset increases if the magnitude. of its expected cash flows increases, if its expected cash flows arrive sooner, or if its risk (risk-adjusted discount rate) decreases. As we discuss below, the discounted cash flow (DCF) valuation model directly results from these valuation principles. Valuation Key 1.2 The value of an asset depends on the magnitude, timing, and risk of the cash flows (called free cash flows) the investor expects it to generate. The discounted cash flow (DCF) valuation model directly results from these valuation principles. Introduction to Measuring Free Cash Flows The DCF model measures the value of an asset as the sum of the expected cash flows the asset gener- ates after adjusting each expected cash flow for its timing and risk. In the context of the valuation of 6 in ST in in
Expert Answer:
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The Bold sections are the given questions needed answered, here is the context: The background you learned is that some companies use excess cash to buy long-term investments (assets on the balance...
-
The management of Oodles of Noodles Inc. is contemplating a 30% stock dividend. The company currently has cash of $250,000, ?xed assets of $5 million, and debt of $3 million. Its net income for the...
-
Maria owns and runs her own online premium clothing business (sole trader) named "Maria's Clothing Solutions (MS). Her main competitor is "Brenda's Extraordinary Clothing (BC). She is interested in...
-
Outdoor Country, Inc. does business in two product segments, Camping and Fishing. The following annual revenue information was determined from the accounting systems invoice information: Prepare a...
-
Given that log 8 y = log 8 (x-2)-2 log 8 x, express y in terms of x.
-
Jerome M. Eisenberg is an antiquities dealer and a self-proclaimed expert in classical antiquities with a doctorate in Roman, Egyptian, and Near Eastern art. Maurice E. Hall Jr. is an art dealer who...
-
On January 1, 2015, the ledger of Accardo Company contains the following liability accounts. Accounts Payable ......... $52,000 Sales Taxes Payable ........ 7,700 Unearned Service Revenue .........
-
b. A fence company is measuring a rectangular area in order to install a fence around its perimeter. If the length of the rectangular area is 130 yards and the width is 75 feet, what is the total...
-
Researchers have found that normally frugal buyers are, when spending others money on themselves (Value Formula C), often less cost-conscious when purchasing than they otherwise would be. Identify at...
-
Find the regular singular points of the differential equation (+2)(x-1) +3(x-1) +2y=0
-
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner. The scanner costs RM6,300,000 and it would be depreciated straight-line to zero over four years. You can...
-
Re-evaluating your Pre-Work company's IP strategy, and offering some recommendations. Have lessons learned from the course changed your views about the IP system, and how your company should interact...
-
Laurel Electronics has a quick ratio of 1.41, current liabilities of $4,462,163, and inventories of $7,863,700. What is the firms current ratio? (Round answer to 2 decimal places, e.g. 12.25.)
-
How do mitochondrial dynamics and function vary among different cell types and tissues, and how does this cellular heterogeneity contribute to organismal physiology, energy metabolism, and...
-
Calculation of individual costs and WACC Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted...
-
On the cost of goods manufactured schedule, depreciation onfactory equipment... A. is not listed because it is not a product cost. B. is not an inventoriable cost. C. is not listed because it is...
-
For the following arrangements, discuss whether they are 'in substance' lease transactions, and thus fall under the ambit of IAS 17.
-
Burrito Bell issued a series of $1,000 bonds eight years ago with an annual coupon rate of $100. The bonds mature 12 years from now. If an investor requires a 6 percent return on this investment,...
-
What is the purpose of market stabilization activities during the distribution process?
-
Millennium Bonds were sold in 2010 with a 10 percent, 25-year maturity, $1,000 par value, and a floating- rate covenant. If rates on similar risk bonds are currently (2016) yielding 7 percent, what...
-
For each of the following studies, identify the type of graph (histogram, time series graph, or scatter diagram) that would be the most appropriate. (You can use more than one graph of each type, for...
-
Use the data in Table 1.4 to make a histogram of the U.S. dollar prices of a Big Mac in these 20 countries. Use these intervals for the prices: 13, 34, 45, 58. United States Argentina Australia Big...
-
For each of the following studies, identify the type of graph (histogram, time series graph, or scatter diagram) that would be the most appropriate. (You can use more than one graph of each type, for...
Study smarter with the SolutionInn App