Alpha Analysts Group, have been asked to conduct the following evaluations for Crown Resort on the Australian Securities Exchange (ASX) for 2017 and 2018. 1) Profitability Breakdown 2) Growth Valuation 3) Forecast Financial Statements for a period of 3 years. (2019 to 2021) 4) Capital Structure Given the following reformulated Income Statement and Balance Sheet answer Questions 1 to 8. (The Annual report for 2017 and 2018 is provided.) Reformulated Income Statements 2017 2018 $3,334,487 $3,462,900.00 $1,835,408 $172,500.00 $5,169,895 $3,635,400.00 Operating Revenue Sales Other Revenue and Income Total Less Operating Expenses Expenses Total operating expenses Total operating income before tax Income tax Expense Operating Income after tax Finance Costs Interest Revenue Net Finance Expenses Share of profits of associates and Joint venture entities Profit for the year (Net income) $3,143,274.00 $2,851,800.00 $3,143,274.00 $2,851,800.00 $2,026,621.00 $783,600.00 $106,815.00 $171,000.00 $1,919,806.00 $612,600.00 $143,617.00 -$76,100.00 $9,648.00 $30,100.00 $133,969.00 -$46,000.00 $39,132.00 $1,824,969.00 $6,600.00 $573,200.00 Reformulated Balance Sheets Operating Asset Cash and Cash equivalents Trade and Other receivables Inventories Prepayments Property, plant and equipment Other financial assets Deferred tax assets Receivables Other financial assets (Non-Current) Investments (Non-current) Investments in associates (Non- Current) Licences Other intangible assets Other assets (Non-current) 2017 $8,552,620.00 $1,771,227.00 $225,290.00 $17,457.00 $35,465.00 $3,959,191.00 $9,375.00 $354,701.00 $145,735.00 $21,892.00 $64,764.00 2018 $8,171,700.00 $1,844,600.000 $172,300.00 $17,300.00 $32,800.00 $3,880,700.000 $9,200.00 $266,900.00 $143,000.00 $23,300.00 $235,511.00 $1,097,296.00 $562,720.00 $51,996.00 $187,800.00 $1,080,600.00 $462,800.00 $50,400.00 (Less) Operating Liabilities Trade and other payables Income tax payable Provisions (Current) Other payables Deferred tax liabilities Provisions (Non-current) Net Operating Assets $1,429,467.00 $446,503.00 $118,168.00 $210,788.00 $224,802.00 $377,423.00 $51,783.00 $7,123,153.00 $1,519,000.00 $427,500.00 $165,300.00 $225,100.00 $287,600.00 $380,900.000 $32,600.00 $6,652,700.00 $350,109.00 $25,700.00 Financial Liabilities Interest-bearing loans and borrowings (Current) Interest-bearing loans and borrowings (Non-current) Other financial liabilities (Non-current) Other financial liabilities (Current) $1,594,889.00 $2,790.00 $1,467,000.00 $2,100.00 (continue) 2017 2018 $1,947,788.00 $1,494,800.00 Net Financial Obligations Shareholder's Equity Contributed equity Treasury shares Reserves Retained earnings Non-controlling interest Common shareholders' equity $53,233.00 $71,900.00 $19,377.00 -$15,700.00 $60,792.00 -$60,500.00 $5,153,080.00 $5,306,000.00 $34,103.00 $5,175,365.00 $5,157,900.00 Net financing $5,175,365.00 $5,157,900.00 Question 5 Complete the following table for Crown Resorts. Assuming a risk-free rate of 3.6% and market risk premium of 7%. Answer the question below: 3.6% 1.13 7.0% Crown Resorts Risk-free rate (10-year Treasury rate) Beta Market risk premium (rm -rf) Cost of Capital for Equity Cost of Capital for Debt (Net Borrowing Cost (NBC) Number of shares Crown's close price on Dec 31, 2018 Market value of equity Net Financial Obligation Market value of the firm Cost of Operations 677.16M $11.86 $8031.11M $1.4948M $8029.62M Cost of Operations = Cost of Capital for Equity * Value of Equity (Value of Debt (NFO) + Cost of Capital for Debt * Value of the firm) Value of the firm Alpha Analysts Group, have been asked to conduct the following evaluations for Crown Resort on the Australian Securities Exchange (ASX) for 2017 and 2018. 1) Profitability Breakdown 2) Growth Valuation 3) Forecast Financial Statements for a period of 3 years. (2019 to 2021) 4) Capital Structure Given the following reformulated Income Statement and Balance Sheet answer Questions 1 to 8. (The Annual report for 2017 and 2018 is provided.) Reformulated Income Statements 2017 2018 $3,334,487 $3,462,900.00 $1,835,408 $172,500.00 $5,169,895 $3,635,400.00 Operating Revenue Sales Other Revenue and Income Total Less Operating Expenses Expenses Total operating expenses Total operating income before tax Income tax Expense Operating Income after tax Finance Costs Interest Revenue Net Finance Expenses Share of profits of associates and Joint venture entities Profit for the year (Net income) $3,143,274.00 $2,851,800.00 $3,143,274.00 $2,851,800.00 $2,026,621.00 $783,600.00 $106,815.00 $171,000.00 $1,919,806.00 $612,600.00 $143,617.00 -$76,100.00 $9,648.00 $30,100.00 $133,969.00 -$46,000.00 $39,132.00 $1,824,969.00 $6,600.00 $573,200.00 Reformulated Balance Sheets Operating Asset Cash and Cash equivalents Trade and Other receivables Inventories Prepayments Property, plant and equipment Other financial assets Deferred tax assets Receivables Other financial assets (Non-Current) Investments (Non-current) Investments in associates (Non- Current) Licences Other intangible assets Other assets (Non-current) 2017 $8,552,620.00 $1,771,227.00 $225,290.00 $17,457.00 $35,465.00 $3,959,191.00 $9,375.00 $354,701.00 $145,735.00 $21,892.00 $64,764.00 2018 $8,171,700.00 $1,844,600.000 $172,300.00 $17,300.00 $32,800.00 $3,880,700.000 $9,200.00 $266,900.00 $143,000.00 $23,300.00 $235,511.00 $1,097,296.00 $562,720.00 $51,996.00 $187,800.00 $1,080,600.00 $462,800.00 $50,400.00 (Less) Operating Liabilities Trade and other payables Income tax payable Provisions (Current) Other payables Deferred tax liabilities Provisions (Non-current) Net Operating Assets $1,429,467.00 $446,503.00 $118,168.00 $210,788.00 $224,802.00 $377,423.00 $51,783.00 $7,123,153.00 $1,519,000.00 $427,500.00 $165,300.00 $225,100.00 $287,600.00 $380,900.000 $32,600.00 $6,652,700.00 $350,109.00 $25,700.00 Financial Liabilities Interest-bearing loans and borrowings (Current) Interest-bearing loans and borrowings (Non-current) Other financial liabilities (Non-current) Other financial liabilities (Current) $1,594,889.00 $2,790.00 $1,467,000.00 $2,100.00 (continue) 2017 2018 $1,947,788.00 $1,494,800.00 Net Financial Obligations Shareholder's Equity Contributed equity Treasury shares Reserves Retained earnings Non-controlling interest Common shareholders' equity $53,233.00 $71,900.00 $19,377.00 -$15,700.00 $60,792.00 -$60,500.00 $5,153,080.00 $5,306,000.00 $34,103.00 $5,175,365.00 $5,157,900.00 Net financing $5,175,365.00 $5,157,900.00 Question 5 Complete the following table for Crown Resorts. Assuming a risk-free rate of 3.6% and market risk premium of 7%. Answer the question below: 3.6% 1.13 7.0% Crown Resorts Risk-free rate (10-year Treasury rate) Beta Market risk premium (rm -rf) Cost of Capital for Equity Cost of Capital for Debt (Net Borrowing Cost (NBC) Number of shares Crown's close price on Dec 31, 2018 Market value of equity Net Financial Obligation Market value of the firm Cost of Operations 677.16M $11.86 $8031.11M $1.4948M $8029.62M Cost of Operations = Cost of Capital for Equity * Value of Equity (Value of Debt (NFO) + Cost of Capital for Debt * Value of the firm) Value of the firm