Check my Williams Company is a manufacturer of auto parts having the following financial statements for 2018-2019. Balance Sheet December 31 2019 2018 0.83 2$ 269,000 159,000 394,000 822,000 Cash 144,000 234,000 points Accounts receivable Inventory 184,000 $ 562,000 Total current assets Long-lived assets 1,730,000 1,590,000 ook $2,552,000 $2,152,000 Total assets References Current liabilities Long-term debt Shareholders' equity 265,000 890,000 308,000 900,000 1,344,000 997,000 $2,152,000 Total debt and equity $2,552,000 Income Statement For the years ended December 31 2019 2018 $3,590,000 2,680,000 $3,690,000 2,780,000 Sales Cost of sales Gross margin Operating expenses* 910,000 509,000 910,000 351,000 Operating income 401,000 559,000 160,400 195,650 Taxes $ 240,600 Net income 2$ 2$ 363,350 Cash Flow from Operations 2018 2019 $ 240,600 Net income 363,350 95,000 Plus depreciation expense + Decrease (-increase) in accounts receivable and inventory + Increase (-decrease) in current liabilities 105,000 (135,000) 43,000 $ 253,600 Cash flow from operations 458,350 *Operating expenses include depreciation expense. Additional financial information, including industry averages for 2019, where appropriate, includes: Industry 2018 2019 2019 Capital expenditures Income tax rate 100,000 190,000 40% 35% 35.0% Depreciation expense Dividends 95,000 105,000 41,000 41,000 Year-end stock price Number of outstanding shares Sales multiplier Free cash flow multiplier Earnings multiplier Cost of capital 3.15 25.00 1,890,000 1,890,000 1.50 18.00 9.00 5% Accounts receivable turnover 11.10 10.50 Inventory turnover Current ratio 2.30 Quick ratio 1.90 Cash flow from operations ratio 1.20 Free cash flow ratio 1.10 Gross margin percentage Return on assets (net book value) Return on equity 30.0% 20.0% 30.0% Required: Develop a business valuation for Williams Company for 2019 using the following methods: (1) book value of equity, (2) market value of equity, (3) discounted cash flow (DCF), (4) enterprise value, and (5) all the multiples-based valuations for which there is an industry average multiplier. For the calculation of the DCF valuation, you may use the simplifying assumption that free cash flows will continue indefinitely at the amount in 2019. Required: Develop a business valuation for Williams Company for 2019 using the following methods: (1) book value of equity, (2) market value of equity, (3) discounted cash flow (DCF), (4) enterprise value, and (5) all the multiples-based valuations for which there is an industry average multiplier. For the calculation of the DCF valuation, you may use the simplifying assumption that free cash flows will continue indefinitely at the amount in 2019. Book value of equity Market value of equity Discounted free cash flows Enterprise value Multiples-based valuation Earnings multiple Free cash flow multiple Sales multiple
