Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a) What is the Cost of Capital for this company? b) What is the value of this company? (Not sure what data is needed so

a) What is the Cost of Capital for this company?
b) What is the value of this company?
(Not sure what data is needed so I included all of it)
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
In fiscal year 2021 , the Company generated $4.7 billion in revenues and $650.9 million in net income attributable to Darling. The Company's stock price is $72.90 with 160.37 million shares outstanding. The five-year monthly beta is 1.23. The company has recently experienced decline in its Fuel Ingredients revenue due to high cost of diesel fuel and has contemplated to divest itself from this segment. The Fuel Ingredients revenue portion was about 9.10% of the total sales in 2021 . Table-1 shows Darling's net sales from fiscal year 2021,2020 and 2019 continuing operations by operating segment were as follows (in thousands): On January 1, 2022, the Company had net income of $650,914 with the total asset of $6,133,728. Table-2 shows the breakdown of the three segments and the company. Table-3 Consolidated Statements of Operations - \begin{tabular}{|l|l|l|} \hline Table-4 Consolidated Balance Sheets - USD (\$) \$ in Thousands & Jan. 01, 2022 & Jan. 02, 2021 \\ \hline Current assets: & & \\ \hline Cash and cash equivalents & $68,906 & $81,617 \\ \hline Restricted cash & 166 & 103 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline Accounts receivable, less allowance for bad debts of $8,196 at January 1,2022 and $10,815 at January 2,2021 & 469,092 & 405,387 \\ \hline Inventories & 457,465 & 405,922 \\ \hline Prepaid expenses & 53,711 & 47,793 \\ \hline Income taxes refundable & 1,075 & 3,883 \\ \hline Other current assets & 38,599 & 42,289 \\ \hline Total current assets & 1,089,014 & 986,994 \\ \hline Property, plant and equipment, net & 1,840,080 & 1,863,814 \\ \hline Intangible assets, net & 397,801 & 473,680 \\ \hline Goodwill & 1,219,116 & 1,260,240 \\ \hline Investment in unconsolidated subsidiaries & 1,349,247 & 804,682 \\ \hline Operating right-of-use assets, net & 155,464 & 146,563 \\ \hline Other assets & 66,795 & 60,682 \\ \hline Deferred income taxes & 16,211 & 16,676 \\ \hline Total assets & 6,133,728 & 5,613,331 \\ \hline Current liabilities: & & \\ \hline Current portion of long-term debt & 24,407 & 27,538 \\ \hline Accounts payable, principally trade & 307,118 & 255,340 \\ \hline Income taxes payable & 32,310 & 17,497 \\ \hline Operating lease liability, current & 38,168 & 39,459 \\ \hline Accrued expenses & 350,681 & 335,471 \\ \hline Total current liabilities & 752,684 & 675,305 \\ \hline Long-term debt, net of current portion & 1,438,974 & 1,480,531 \\ \hline Operating lease liability, non-current & 120,314 & 109,707 \\ \hline Other noncurrent liabilities & 111,029 & 117,371 \\ \hline Deferred income taxes & 362,942 & 276,208 \\ \hline Total liabilities & 2,785,943 & 2,659,122 \\ \hline Commitments and contingencies & & \\ \hline \\ \hline \end{tabular} Answer the following question if the risk-free rate of interest is 3% and the market risk premium is 5%. In fiscal year 2021 , the Company generated $4.7 billion in revenues and $650.9 million in net income attributable to Darling. The Company's stock price is $72.90 with 160.37 million shares outstanding. The five-year monthly beta is 1.23. The company has recently experienced decline in its Fuel Ingredients revenue due to high cost of diesel fuel and has contemplated to divest itself from this segment. The Fuel Ingredients revenue portion was about 9.10% of the total sales in 2021 . Table-1 shows Darling's net sales from fiscal year 2021,2020 and 2019 continuing operations by operating segment were as follows (in thousands): On January 1, 2022, the Company had net income of $650,914 with the total asset of $6,133,728. Table-2 shows the breakdown of the three segments and the company. Table-3 Consolidated Statements of Operations - \begin{tabular}{|l|l|l|} \hline Table-4 Consolidated Balance Sheets - USD (\$) \$ in Thousands & Jan. 01, 2022 & Jan. 02, 2021 \\ \hline Current assets: & & \\ \hline Cash and cash equivalents & $68,906 & $81,617 \\ \hline Restricted cash & 166 & 103 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline Accounts receivable, less allowance for bad debts of $8,196 at January 1,2022 and $10,815 at January 2,2021 & 469,092 & 405,387 \\ \hline Inventories & 457,465 & 405,922 \\ \hline Prepaid expenses & 53,711 & 47,793 \\ \hline Income taxes refundable & 1,075 & 3,883 \\ \hline Other current assets & 38,599 & 42,289 \\ \hline Total current assets & 1,089,014 & 986,994 \\ \hline Property, plant and equipment, net & 1,840,080 & 1,863,814 \\ \hline Intangible assets, net & 397,801 & 473,680 \\ \hline Goodwill & 1,219,116 & 1,260,240 \\ \hline Investment in unconsolidated subsidiaries & 1,349,247 & 804,682 \\ \hline Operating right-of-use assets, net & 155,464 & 146,563 \\ \hline Other assets & 66,795 & 60,682 \\ \hline Deferred income taxes & 16,211 & 16,676 \\ \hline Total assets & 6,133,728 & 5,613,331 \\ \hline Current liabilities: & & \\ \hline Current portion of long-term debt & 24,407 & 27,538 \\ \hline Accounts payable, principally trade & 307,118 & 255,340 \\ \hline Income taxes payable & 32,310 & 17,497 \\ \hline Operating lease liability, current & 38,168 & 39,459 \\ \hline Accrued expenses & 350,681 & 335,471 \\ \hline Total current liabilities & 752,684 & 675,305 \\ \hline Long-term debt, net of current portion & 1,438,974 & 1,480,531 \\ \hline Operating lease liability, non-current & 120,314 & 109,707 \\ \hline Other noncurrent liabilities & 111,029 & 117,371 \\ \hline Deferred income taxes & 362,942 & 276,208 \\ \hline Total liabilities & 2,785,943 & 2,659,122 \\ \hline Commitments and contingencies & & \\ \hline \\ \hline \end{tabular} Answer the following question if the risk-free rate of interest is 3% and the market risk premium is 5%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

AML Auditing Understanding Global Custody Services

Authors: Bob Walsh

1st Edition

1539534367, 978-1539534365

More Books

Students also viewed these Accounting questions