Teuer Furniture $($B$)$: Multiples Valuation $($Case# KEL$788-$PDF$-$ENG$)$ Description: Teuer Furniture is a privately owned, moderately sized chain of upscale home furnishing showrooms in the United States. By the end of $2012,$ it had regained its financial footing and a number of long$-$term investors, including several of Teuer's original non$-$ management investors, now want to sell their shares. At the request of the board, Jennifer Jerabek, the chief financial officer of the company, and her team put together an extensive valuation of Teuer based on a discounted cash flow analysis. When the model was presented to investors, a number of them disagreed with the results. Some investors considered the value too high; others considered it too low. Not surprisingly, some of the differences of opinion were correlated with whether or not the investors wanted to sell their shares of Teuer. Jerabek was instructed to build a valuation of Teuer using a multiples approach instead. Areas covered: Cash flow; Entrepreneurial finance; Financial strategy; Present value; Valuation Questions: You are responsible for estimating the value of Teuer Furniture $($overall and on a per share basis$).$ You should use the multiples approach to value the firm. Items below will help guide your analysis. $1.$ Calculate Teuer$$s multiples. Let$$s say, the value of Teuer derived using DCF methodology is $$32\mathrm{.}00,$ calculate the sales, net income and cash flow from assets multiples for Teuer at the end of $2012.$ Why do the three ratios differ from each other? Calculate the three multiples at the end of $2018.$ If they are expected to change between $2012$ and $2018,$ explain why. Consider what each ratio is measuring and thus what assumptions you are making about comparability when you use each ratio. $2.$ Comparable firms. When you value a firm using a multiples approach, you only use firms that are comparable to Teuer $($the target firm$).$ On what dimensions should the firm be comparable to target firm? Each of nine possible firms is in the same industry as Teuer. Based on the information in the case, pick a set of firms that you consider to be comparable to Teuer in the important dimensions. You will need to be explicit about which dimensions are important. $3.$ Value Teuer using a multiples approach. Based on the set of firms that you consider comparable, calculate the relevant multiple and value Teuer $($price per share$).$ If your multiples valuation differs from DCF valuation given in Question $2$ above, explain why.