Assumptions Industry Beta Information Market Multiple Data Industry Financial STUDENT PROMPT NMG, Inc. is keen on acquiring HES, Inc., a privately-owned clothing retail company. As a hired consultant, your role is to assist NMG, Inc. in this acquisition process. To accomplish this, please address the following requirements: 1. Perform a comprehensive ratio analysis for HES, Inc. a- Compute six financial ratios for the year 2023, covering three profitability ratios (including ROA and ROE/ROCE ) and three risk analysis ratios. (12 pts) b- Utilize data from the past four years to carry out a financial ratio analysis for the company. Contrast HES's 2023 ratios with industry benchmarks; identify and discuss any discrepancies while offering a thoughtful analysis (8 pts) 2. Develop cash flow statements. a- Cash flow statements for the period from 2024 to 2028. (15 pts) b- Evaluate the quality of earnings for the projected years. (10 pts) 3. Compute the Free Cash Flow for the years 2024 through 2028. a- Free Cash Flow to Equity (FCFE) (10 pts) b- Free Cash Flow to Firm (FCFF) (10 pts) 4. Estimate HES, Inc.'s stock intrinsic value in 2023 utilizing the following valuation models: a- Dividend Discount Model (DDM), (15 pts) b- Discounted Cash Flow (DCF), and (15 pts) c- Residual Income Model (RIM) valuation methods. (15 pts) Camman Ina Ctatamanta af Eauminam lin nnnl Compac, Inc. Balance Sheets (in 000) Liabilities \& Stockholders' Equity 5. Establish the company's stock value in 2023 using Comparable Company Analysis (Comps). Utilize at least three valuation ratios like EV/Revenue, Price/Sales, Price/Book Value, and Price/Earnings for this purpose. (10 pts) 6. Based on your valuation results, offer a recommendation on whether to proceed with the acquisition. Make sure to substantiate your recommendation with a thorough discussion. (10 pts) Paper Format 1. All papers should be double spaced, using an 11- or 12-point font. Refer to the APA Style Sheet for additional information. 2. The first page should include the title of the work, student name, course number and title, date, and professor name. 3. The second page should be a table of contents. 4. Follow APA style for general format and citations. 5. The paper sections must adhere to the TOC, and each section must be labeled in the text. 6. The language should be clear, concise, and precise. 7. The tone should be professional, consistent, and not filled with jargon. 8. Grammar and syntax (sentence structure) must be correct. 9. The report must be free of misspellings and typos. Table and Figures 1. All figures and tables must be referred to in your text before they appear on the page. 2. Figures and tables should appear on the same page as, or the page after, the text that refers to them. 3. All figures and tables need captions. Captions go below figures and above tables. Quotations and Citations 1. Quotations and citations are crucial components of a research paper and must be present. 2. Failure to properly cite research sources and borrowed ideas is plagiarism. 3. Refer to the APA style guide for assistance with properly citing quoted or borrowed materials and ideas. 4. Turnitin.com is used on all reports and projects. A report can be obtained for your review prior to submitting your final work. Make sure that you are in compliance with the University's 20/80 rule. Assumptions Industry Beta Information Market Multiple Data Industry Financial STUDENT PROMPT NMG, Inc. is keen on acquiring HES, Inc., a privately-owned clothing retail company. As a hired consultant, your role is to assist NMG, Inc. in this acquisition process. To accomplish this, please address the following requirements: 1. Perform a comprehensive ratio analysis for HES, Inc. a- Compute six financial ratios for the year 2023, covering three profitability ratios (including ROA and ROE/ROCE ) and three risk analysis ratios. (12 pts) b- Utilize data from the past four years to carry out a financial ratio analysis for the company. Contrast HES's 2023 ratios with industry benchmarks; identify and discuss any discrepancies while offering a thoughtful analysis (8 pts) 2. Develop cash flow statements. a- Cash flow statements for the period from 2024 to 2028. (15 pts) b- Evaluate the quality of earnings for the projected years. (10 pts) 3. Compute the Free Cash Flow for the years 2024 through 2028. a- Free Cash Flow to Equity (FCFE) (10 pts) b- Free Cash Flow to Firm (FCFF) (10 pts) 4. Estimate HES, Inc.'s stock intrinsic value in 2023 utilizing the following valuation models: a- Dividend Discount Model (DDM), (15 pts) b- Discounted Cash Flow (DCF), and (15 pts) c- Residual Income Model (RIM) valuation methods. (15 pts) Camman Ina Ctatamanta af Eauminam lin nnnl Compac, Inc. Balance Sheets (in 000) Liabilities \& Stockholders' Equity 5. Establish the company's stock value in 2023 using Comparable Company Analysis (Comps). Utilize at least three valuation ratios like EV/Revenue, Price/Sales, Price/Book Value, and Price/Earnings for this purpose. (10 pts) 6. Based on your valuation results, offer a recommendation on whether to proceed with the acquisition. Make sure to substantiate your recommendation with a thorough discussion. (10 pts) Paper Format 1. All papers should be double spaced, using an 11- or 12-point font. Refer to the APA Style Sheet for additional information. 2. The first page should include the title of the work, student name, course number and title, date, and professor name. 3. The second page should be a table of contents. 4. Follow APA style for general format and citations. 5. The paper sections must adhere to the TOC, and each section must be labeled in the text. 6. The language should be clear, concise, and precise. 7. The tone should be professional, consistent, and not filled with jargon. 8. Grammar and syntax (sentence structure) must be correct. 9. The report must be free of misspellings and typos. Table and Figures 1. All figures and tables must be referred to in your text before they appear on the page. 2. Figures and tables should appear on the same page as, or the page after, the text that refers to them. 3. All figures and tables need captions. Captions go below figures and above tables. Quotations and Citations 1. Quotations and citations are crucial components of a research paper and must be present. 2. Failure to properly cite research sources and borrowed ideas is plagiarism. 3. Refer to the APA style guide for assistance with properly citing quoted or borrowed materials and ideas. 4. Turnitin.com is used on all reports and projects. A report can be obtained for your review prior to submitting your final work. Make sure that you are in compliance with the University's 20/80 rule