Davidson Yachts is a small company founded by two businesspeople who are friends and avid salos. At present, they are interested in expanding the business and have asked you to review is financial statements. Davidson Yachtssels appreciately 120 to 170 sailboats each year, ranging from 14-foot dinghiesto 20 tot sa boats. Their sales price range from S2.200 to more than $10.200. The company has a limited Inventory of boats consisting primary of one or two boots from each of the four manufacturers that supply Davidson. The company also sels a variety of supples and parts and performa different types of service. Most sales are on The company operates from a large building that has offices, songs, and sales space for some of the smale salboats. The larger sailboats are kept In a fenced area adiacent to the main building, and an ample parking areas nearby. This year, Davidson purchased a boat in to haul boats. The it has brought in revenues for boat repairs, hul painting and related services, as well as the boat haus. The balance sheet and income statement for Davidson Yachts for 2014-2019 flow. The increase in net feed assets in the recent years is due to Improvements in the building paving of the parking area, and the purchase of the in DAVIDSON YACHTS COMPANY Comparative Balance Sheet 2018 $ 21, 3, Accounts recente 99,00 33,054 113, 143 125,923 Allowance for bad debt (6) (7,3) (12,700 Tentory other current este . 3,204 30.123 Total current au SLO, $188,232 $ 194,430 Property and it 262,795 299,50 76,75 490,00 Alated deprecation (0,184 (23,42) 323,022) 390,00) 207,427) 227,507 5257,25 574,10 $ 179,410 5. 57,457 $ 55,00 te rychle Tes payable 14,20 3,90 be, 43.203 16,32 40,14 Accrued Payroll payable 5,02 DOM 0.00 Total current 130 3 3151, 3110 31 110,00 Eoty Total ties and 539,23 13, 233,00 SON YACHTS COMPANY Comparative Statenent of Income and Operating Cash Flow the S. 550,40 48.5 Return Cales 5205,41524, 1155279,95 5937,99 $270,2945173,000 Depreciation wense 29.01 13,6 12.5.22 20.10 0.100 Interested Salaries and we 61.943 73,65+ 72, 95,754 92,23 Acting and legal 9.00 13.11 Administrationen Other Total 5239,3 1226, 328,133 203,772 $207,77 $12,223 Net Income 324,00 324,300 45.18 5 4,310 311,177 358.937 Casa Torton (a to set the $ 27, 33, 35,222 $ 20,14 0,200 Decrease increase in reales (3.77) (10) (1,318) 17,351 14.) Decrease increase in retary 0,113 8.90 (57.100 Decrease increases in other current assets 1.000 ). 2.0 (2.45 Increase (decrease in current liabilities The company obtain its debt financing from two sources: (1) a small savings and loan for its shondermunds and (2) a larger commercial bani, also for short-term loans, but prindpally for long term facing the terms of the loan agreement with the bank Indude a restriction that Davidson's current ratio m.stremingher than 15 Required 1. What is the valuation of Davidson Yachts Companying the book value of equity method 2. What is the valusion of Davidson Yachts Companying the multiples-based method on camings? Assume the industry average camins multiple Is 7. Use the median value of the most recent years for earning 3. What is the valuation of Davidson Yachts Company in the multiples-based method on operating cash flow? Assume the industry average multiple on operating cash flow is 5. Use the median value of the most recent years for cash flow. Valuation Method Valuation Netbook of equity 2 Lamings multiple Operating cash flow multiple 1
