Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help answering these questions with formula. Thank you so much ! S airlines - Simplified Financial Statements (adjusted) in BHT mil Income statement Net

image text in transcribed

Please help answering these questions with formula. Thank you so much !

image text in transcribed S airlines - Simplified Financial Statements (adjusted) in BHT mil Income statement Net sales COGS Gross Profit GP Margin SG&A Earnings before interest and taxes (EBIT) EBIT Margin Less Interest Earning before tax (EBT) Less Taxes Net Income NI Margin Dividends Payout # Share outstanding (in mil) 2015 2016 389,251 342,394 46,857 12.0% 426,039 368,759 57,280 13.4% 35,293 11,564 40,684 16,596 3.0% (1,971) 13,535 (2,707) 10,828 2.8% 3.9% (1,283) 15,313 (3,063) 12,250 2.9% 6,848 63.2% 6,417 52.4% 7,452 Balance Sheet 2015 2016 Assets Cash Marketable Securities Accounts receivable Inventories Total Current Assets Long term investments Net plant and equipment Total Assets 14,202 8,546 24,287 77,209 124,244 51,527 189,232 365,003 26,135 13,185 25,047 81,886 146,253 63,181 207,330 416,764 Liabilities and Equity Accounts payable Notes payable Accruals Total Current Liabilities Long-term bonds Common stock Retained earnings Common equity Total liabilities and equity 21,887 77,230 15,884 115,001 140,207 55,482 54,313 109,795 365,003 25,632 79,503 18,150 123,285 175,947 56,581 60,951 117,532 416,764 2015 2016 10,828 3,722 (944) 13,606 12,250 14,291 (3,621) 22,920 Cash flows from investing Capital expenditures Cash from investing activities (24,222) (24,222) (18,164) (18,164) Cash flows from financing Net debt cash flows Net stock cash flows Cash dividends Cash from financing activities 24,048 591 (6,848) 17,791 14,441 509 (6,417) 8,533 Cash flow statement Cash flows from operations Net income Depreciation & Amortization Changes in Net Working Capital Cash from operating activities 1. Stock repurchases Bird air is deciding to return the money to its shareholders by using all of its current cash to buy back its stocks. Please help the company analyse the consequences. Please use the cash value from your balance sheet. Assuming the current book value of its stock is the same as intrinsic value of the company, and the stock is currently trading at $18 per share. a) What is the current book value per share for the company? b) What is the current EPS for the company? c) How many shares will be repurchased? How many shares will remain after the repurchase? d) What is the EPS immediately after the repurchase? e) What is the impact on the new EPS (increase/decrease by how much?) f) Immediately after the repurchase, what is the firm's total asset? new Total assets after repurchase = old assets - idle cast g) What is the firm's total liability-to-equity ratio before and after the repurchase Hint: for this liability, please use the total liabilities. In other words, everything but equity h) What is the company's book value per share after the repurchase? i) If the company is to continue trading at its current P/E, should the company go ahead with the repurchase plan? What will happen to the current stock price? j) If the company is to continue trading at its current P/B, should the company go ahead with the repurchase plan? What will happen to the current stock price

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Finance

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Roberts, Hamdi Driss

8th Canadian Edition

01259270114, 9781259270116

More Books

Students also viewed these Finance questions

Question

Explain the importance of intersectionality in sampling.

Answered: 1 week ago

Question

Define kaizen budgeting. lop8

Answered: 1 week ago