I have an accouting question regarding calculating a fair stock price based on a companies balance sheet. I am bit confused by the process and am hoping someone can help me with this. The attached document is a question I am confused on along with the balance sheet info, statement of cash flows. Any feedback would be greatly appreciated.
Assume that you believe that Steinway's balance sheet is fairly recorded except as
follows. The internally-developed Steinway brands are worth $100,000, their
property plant and equipment is worth $140,000 and the reserve which was
established for environmental liabilities discussed in the footnotes should be
$15,000.
Estimate a fair stock price per share for Steinway as of year-end 2012 (they have
12.410 million shares outstanding).
1. Assume that you believe that Steinway's balance sheet is fairly recorded except as follows. The intemay-developed Steinway brands are worth $100000, their property plant and equipment is worth $140,000 and the reserve which was established for environmental liabilities discussed in the footnotes should be $ 1 5 .000. Estimate a fair stock price per share for Steinway as of year-end 2012 (they have 12.410 million shares outstanding). (6 points) CONSOIJDHTED BALANCE 5HEEI'5 Steinway MUSIC-El Instruments, Inc. and ubsldlaes (In TI'IGLISBI'IIB Except snare and FBI' SI'IEII'E'.' Data} December 51, 2131 1 2012 ASSETS Current assets: Cash 49.55:: 13,406 Accounts recewablee, net 01' mm 1'0! bad debts at ants: and 5,353 In 2011 am: 1312, respectll'ey 42,322 43,336 Inventories 132,4u1 125.1151 Prepaid expenses: and other current assets; 24,015 14,309 Total current assets 248,621 236,332 Properly, ptanl: and equipment, net 86.99? 91.435 Trademarks 13,?43 1 3,420 Goodwt 22,676 22,91 It Other asset 37,33? 41,514 Total assets 409,374 425,66? Liabilities and stockholders' equity Current liabities: Debt 650 576 Accounts payable 1 0.?02 12,367 Gthet current liabilities 33.623 40.1?5 Total cunent liabilities 49.975 53.618 Long-term debt 67.36? 67,431 Other nonmnent liabilities 59.439 62,773 Total iiablities 176.731 183.822 Commitments and contingent liabilities Stockholders? eeui'y: {)Fdirlary cnrnrrlnn stack .1 m1 par mine 14 14 Additinnnl paidin mpitel mama 162,579 Retained earnings. 1355')? 14:133.: Anmlmlllnl'ed ether mnmreheraiv'e truss: t1 9,97} {Dim} Treasury stack {441.663} [44,0731] Total gluckhuidem' equity 132,593 24-1345 Trial liablities and Rtrmichnldern' equity anon-m 495,65? CONSOLIDATED STATEMENTS OF OPERAHONS Steinway Musical instruments, Inc. and Subsidiaries (In Thousands Except Share and Per Share Data) SEIES Cost (.11 53585 Gross prot Operating expenses: Bates and malicettng General and administrative Other operating expenses Totai operatir'g expenses Income ti\"on1 operations Other expense, net Interest income Interest expense Total nmpperang expenses, net Income before income taxes Income tax provision Net income December 31, 2011 346,256 241,103 165,148 43,551 33,921 5,715 39,215 15,930 5,543 (1,339) 11,113? 12,345 3,534 1,954 1,530 2012 353,71? 239,033 11 4,634 45,924 35,454 1,545 35,034 25,501: 3,405 (1,154} 4,335 7,115? 21,544: 3,933 13,511: DDIISDIJDATED ETA'I'EIIENTS DF CASH FLU'WS Steinway Musical hsmlnerrls. Inc. and Suhsiiiaries [h unsmdsj December 31. 2911 ash ows from operating anvies; Nei haulne 1.339 Adjuslmenls In reennuie net iname In cash flows [mm nperaru aeliuities: Depreciaiinn and amnrtizalian 3391 CHher 9.421 Changes in operating assets and liabiilies. net of eee'ls beusinesses acquiled: Amnls. notes and oler receivablv {41} Inventories 9.315 Prepaid expenses and ulher assels {4,543} Amnls payeble HAM} (ier current and nnncment liabiilies 2.418 Bash rms from operating aniivilies 22.531 Cash ows frnm investing ecliuities: Capital erpendilm'es [5.9531 Pmueeds from sales of property. plant and equipment 42 Payment for aecpisilions [3.2591 Cash ows from investing activities [19.31\" [Lash aws fmm fl'lancing adiuies: Burrmirus under li'Ies oferedit \"9? Repayments underlines afcre-cit [13.43911 Repayments of lung-1mm debt [89.453] Proceeds from issuanee elmmmnn stock 4.911 Cash aws fmrn financing BCti'H'iE [83.4491 Elfec'is of foreim exchange rate {:ha'lges on cash LIE- Increase [demease] in cash [69.923] Cashbegfnn'rig efyear 119.911 Gash. end one! 49.9913 Supplemental cash ow infu'rrmtiun: Imwest paid 8.9m Innurne taxes paid 3.72? 21:12 13,510 sums 1,515 [435} 2,5." 2,43: 2,155 5:53 23.11 3 {Luau} 2m: [ME- 4,500 {4,500} 1.11 1R1 a 23.51 a 49.333 13,405 1.30: 1,763 ADIJI'I'DHHL DATA Shei-rwayusiual ilslnlnenls, Inn. and Emmhies [il'l'housalds] Amyof! adityinihe inaneefordnulftd amount. isasfoIInnrs: FurmeyearsendedDeoernb-EI'BT. 212111 21112 Beg'mn'rng bdance 111.316 9.033 Additinns charged In expenses 1111 EH Demmions' {1.3341 (3,4112) End'mg balanoe 3.1183 8,353 Mmn'i2 i121)\" \"scram Amnufreadiuitfinmueduarmtyelpense'asfulm: FurmeyearsendedDeoernb-EI'BT. 212111 21112 Beginning balance 1.5111 1,242 Addions 1.123 1.11911 Elaine $1.391! (1,111.11 Ending balance 1.242 1.32? Inventories: Forlhe yesended Deoernbera'r. 21111 21112 Rawnmneals 13.242 15.532 Wortinpmoas 33.317 34,1123 Fl'lisl'led goods B'EIJEZ HIEFE 132.4111 125,031 a mufn innity in re hvenlnryresenres is as follows: For Ihe Ears ended December 31. 21111 21112 Beghning balance 13.1154 121' Addiens {married to expenses 1.1313 2.412 Medians (264?: (LEE) Ending balanne 12.221] 11,1195 Conuent; and Corrlingerd LiahiIi'IiE: We are enrhuing an e'o'sl'mg environmental remedjaon plan at a facililylre acquired i1 211111. Weermedt: prey-thee nests. midi appruadmde 5115 miIIon. over an Eyea' period. We have amued a Iiabilyta'iDA mion for Ihe esb'rnaled rerna'm'ng oust nflhis remediaon pro-gran. I\"111111 represenls the praierrl value ofto'lal cost us'mg a discount rate nf'i'i'. W mesuns: Band at Mural rm: 5.11mi: Scar-em 0111:: S: US. (Jenn-II;r Dur MI US. Ithlr 'Rm lial Cmiliid 3191-] Meme-t vmemrml mum-=11! 510D T 555 135 1.30 3216 1'1 31. 991 514 11135 .5 3 7|? Dow-orbs prot floss] 5'63 \"\"21?!- 3:11.21 21:?\"- 3&91? s$131115\"1:93\"! (3.8115) (\"rm '1an]. 1.1mm Emu. (in; [3:133 {431*} r101) (m: {11:} {ma-r} Inherent emu: 5.5m 1'1 133 5,?05 5.033 5,1139 (5,9139) 4,335 Depreciation and amorzatim 4.537 L330 54? 5.41-1- m II 1.251 415 9.1333 IMMIH use Ismail-Ida dunnul' {3,8451} 3,3314 2.1218 4311 3,ISJT 3,215 SIM 3,033 Net irrcwrncl [less]: 1796) 71.8113 51519.1 HM 2.4111 AH 2.555 (3.1413)- 13.5\"} Cepha'l emporium 3.1543 2.5111 311 5.355 1.715 1 .7115 7.1111} Prop-ow. plant and mum\": 55.596 16.12.! 5344 9.9.0153 13.995 3 13.359. s-r 91.435 11:13] meta 149,636 78,4111 \".350 216.1111 334.1113 5566 141W (\"11'\") 1.25.661 gnu Revamnmmorrm m1": 3 03.152 1154.752 552.6111 5215.541 313111.313 Sit-.112 315513.115 $- $346,256 Dalmatia; prot {lulu} 3.334 13.651 5.134 13.159 632 411'? 1.1119 (3.365} 1533!} Inn-non inmmn ('11-'11 {13:1 {1 to} {11.1) {11116) {1.1116} {FIT} (1.1311) Interest \"perm 1.1.26? 1'; 6,413 5.521 5.511 (4.962} 7.537 Dspmiltiarr and unmliulbn 4.234 I356 .534 5.134 am 11} 3.154 m BJ'EI 1mm Bram-hie: {benet} {7,1311} 15.612 1.119? 10,153 (2,212) 135 (1,111?) (5.121) 1.95:1 Nu imam {luau ' (6119]. {2.119) 1.478 1.130 {1.1143 in: {1.2393 1.139 1.63m Cupibol Wilma 3.1501 4.211? 2.11% 2.6116- 29 6.913 Properly. plant and Warm 53,421- 14,498 4,361] T2332 14,133 12. H.115 '31] 83.99? 1131111 and: 140.113] 77.0116 31,514 251w] | 111.15! SHE-111 1111.151 (TE-311]: 11011314
