Question
It is the end of 2017 and you are asked to value the XYZ corp. You have the following financials for this firm. 2017 2018
It is the end of 2017 and you are asked to value the XYZ corp. You have the following financials for this firm.
| 2017 | 2018 | 2019 | 2020 | |
| Income Statement | ||||
| Sales | 1,500,000 | 2,000,100 | 2,400,000 | |
| COGS | 1,200,000 | 1,600,080 | 1,920,000 | |
| Other Expenses (includes dep) | 150,000 | 200,010 | 240,000 | |
| EBIT | 150,000 | 200,010 | 240,000 | |
| Interest Expense | 100,000 | 100,000 | 100,000 | |
| EBT | 50,000 | 100,010 | 140,000 | |
| Tax | 17,500 | 35,004 | 49,000 | |
| Net Income | 32,500 | 65,007 | 91,000 | |
| Selected items of the balance sheet | ||||
| NetPPE | 80,000 | 100,000 | 133,340 | 160,000 |
| AR | 100,000 | 123,288 | 164,392 | 197,260 |
| AP | 120,000 | 147,945 | 197,270 | 236,712 |
The tax rate is 35%. You expect sales to grow at 4% from 2020 on. In addition, the cost of capital for this firm is 12%.
Q. Compute the average historical Sales/NetPPE and average historical Accounts Receivable Days on Hand
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started