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INDIVIDUAL EFFORT - NO HELP Z-Model 18 Pts EACH Yr. Compute Z-scores for 2 yrs X-1 Working Capital / Total Assets Z score > WGHT 2018 2017 1.2 2016 3,137 2,265 872 707 165 66 X-1 > 1.4 X-2 Retained Earns / Total Assets Ret. Earns Tot Assets 98 27 125 38 X-2 > 3.3 X-3 EBIT/ Total Assets 87 EBIT 87 Tot Assets 2016 X-3 > 93 0.6 COMPUTE THE Z-MODEL SCORE using data below millions of US Dollars INCOME STATEMENT 2018 2017 Sales / Revenue (Net) 3,509 3,467 Cost of Goods Sold 2,574 2,540 Gross Profit (Loss) 935 926 Selling, General and Administrative Exp 767 773 Operating Inc Before Depreciation 168 154 Depreciation & Amortization - Total 84 77 Operating Income, EBIT 84 76 Interest (Exps or credit) - Net -2 3 Pret-Tax Income & Other 82 79 Income Taxes Expense (Credit) 19 -19 Income Before Extraordinary Items 63 98 NET INCOME (LOSS) 63 98 millions of US Dollars Current Assets 2019 2017 Cash and Short-Term Investments - To 107 99 Receivables - Total 57 85 Inventories - Total 281 280 Current Assets - Other - Total 24 19 Current Assets Total 469 483 Property Plant & Equipment - Total (N 888 886 Intangible Assets - Total 75 72 Non-Current Assets Total 963 958 ASSETS TOTAL 1,432 1,442 millions of US Dollars Current Liabilities 2017 Debt in Current Liabilities 0 0 Account Payable/Creditors - Trade 191 216 Current Liabilities - Other 76 58 Current Liabilities Total 267 274 Long-Term Debt Total 0 35 Deferred Taxes and Investment Tax Cre 91 87 Liabilities (Other) 51 52 Long-Term Liabilities Total 142 175 Liabilities Total 409 449 Common Stock issued 460 447 Retained Earnings 563 546 Shareholders' Equity Total 1,023 993 LIABILITIES & SHAREHOLDER EQUITY 1,432 1,442 $ 45.00 $ 42.00 28.8 28.5 X-4 Market Val. Stock / Tot Liabilities Stock Price Stk Shares mill. Market Capitalization Tot. Liabilities 98 277 16 484 878 X-4 > 69 1.0 947 1,431 X-5 Net Sales / Total Assets Revenue Tot Assets X-5 > 2019 2016 0 199 Individual Effort -no help 12 pts each year Calculate Free Cash Flow for 2 Yrs USE 25% INC.TAX RATE 2018 EBIT EBIT x (1 - 25 tax rate) 77 276 2017 64 119 44 228 505 417 510 927 1,431 Free Cash Flow Exam-3 At-Home Dec.3 NAME #3 Use Data provided to estimate the value of Firm ABC based on relative P/E ratio Enter 3 Answers into online Quiz Dec. 2-3 INDIVIDUAL EFFORT - NO HELP VALUE BY INDUSTRY COMPARABLES (MULTIPLES) NAME Firm A-B-C-D are Industry Peer firms Individual Effort - NO Help 20pts Use "Comparables" method to estimate firm X's stock price. Enter correct values in 'boxed' areas. S&P500 PE Multiples Valuation Estimate PE-annual PE-annua S&P500 Firm 'ABC 2020 21.6 15.5 2019 23.8 16.9 2018 19.4 14.8 2017 17.9 14.1 P/S P/E P/BK $000 Firm A Firm B Firm C Firm D Sales 130,000 148,000 95,000 112,000 Earnings Book Value Market Cap Value 14,000 115,000 150,000 10,500 105,000 175,000 9,000 85,000 120,000 9,700 92,000 135,000 Firm 'ABC' Relative P/E S&P500 20.68 Step-1 AVG PE +/- 10% range Firm X > S&P500 PE Firm 'ABC' Est'd PE $ 71,000 $ 8,000 $ 54,000 COMM SHARES 1,500 Firm X Estimated stock value ----> > Step-2 22.40 FORECAST 2021 Baseline OPTIM (+10 %) PESSIM (-10%) Step-3 Firm 'ABC' EPS Forecast Firm 'ABC' Est'd Stock Value 2021 Baselines 3.60 $ INCOME STATEMENT 2018 2017 2016 Sales/Turnover (Net) 3,509 3,467 3,137 Cost of Goods Sold 2,574 2,540 2,265 Gross Profit (Loss) 935 926 872 Selling, General and Administrative Exp 767 773 707 Operating Inc Before Depreciation 168 154 165 Depreciation and Amortization - Total 84 77 66 Operating Income After Depreciation 84 76 98 Interest - Net -2 3 27 Pret-Tax Income & Other 82 79 125 Income Taxes Expense (Credit) 19 -19 38 Income Before Extraordinary Items 63 98 87 NET INCOME (LOSS) 63 98 87 CASH FLOW STATEMENT (numbers in millions) OPERATING ACTIVITY 2018 2017 2016 Income Before Extraordi 63 98 87 Depreciation and Amort 94 85 77 Adjustments to Net Inco 8 -33 -17 Inventory - Decrease (In -1 -3 -38 Other Changes in Operat -15 17 42 OPERATING ACTIVITIES - 148 166 152 2017 96 INVESTING ACTIVITY Capital Expenditures Other Cash Flow from In INVESTING ACTIVITIES - 2018 96 5 -91 2016 142 -45 -187 -2 -97 2018 2017 32 FINANCING ACTIVITY Cash Dividends FINANCING ACTIVITIES - 2016 32 2017 2016 33 99 93 -68 -62 32 2018 107 57 281 85 280 Current Assets Cash and Short-Term Investments - To Receivables - Total Inventories - Total Current Assets - Other - Total Current Assets Total Non-Current Assets Property Plant and Equipment - Total Intangible Assets - Total Non-Current Assets Total ASSETS TOTAL 98 277 16 484 24 469 19 483 12pts ea.Calculate Free Cash Flow for 2 Yrs USE 25% INC.TAX RATE 2018 2017 EBIT EBIT x (1 - 25 tax rate) 888 886 878 75 72 69 963 958 947 1,432 1,442 1,431 Current Liabilities 2018 2017 2016 Free Cash Flow 2018 2017 Debt in Current Liabilities Account Payable/Creditors - Trade Current Liabilities - Other Current Liabilities Total Long-Term Debt Total Deferred Taxes and Investment Tax Cre Liabilities (Other) Long-Term Liabilities Total Liabilities Total Common Stock issued Retained Earnings Shareholders' Equity Total LIABILITIES & SHAREHOLDER EQUITY T 0 0 0 191 216 199 76 58 77 267 274 276 0 35 64 91 87 119 51 52 44 142 175 228 409 449 505 460 447 563 546 510 1,023 993 927 1,432 1,442 1,431 Additional data provided is Cash Flow Statement section at top 417 INDIVIDUAL EFFORT - NO HELP Z-Model 18 Pts EACH Yr. Compute Z-scores for 2 yrs X-1 Working Capital / Total Assets Z score > WGHT 2018 2017 1.2 2016 3,137 2,265 872 707 165 66 X-1 > 1.4 X-2 Retained Earns / Total Assets Ret. Earns Tot Assets 98 27 125 38 X-2 > 3.3 X-3 EBIT/ Total Assets 87 EBIT 87 Tot Assets 2016 X-3 > 93 0.6 COMPUTE THE Z-MODEL SCORE using data below millions of US Dollars INCOME STATEMENT 2018 2017 Sales / Revenue (Net) 3,509 3,467 Cost of Goods Sold 2,574 2,540 Gross Profit (Loss) 935 926 Selling, General and Administrative Exp 767 773 Operating Inc Before Depreciation 168 154 Depreciation & Amortization - Total 84 77 Operating Income, EBIT 84 76 Interest (Exps or credit) - Net -2 3 Pret-Tax Income & Other 82 79 Income Taxes Expense (Credit) 19 -19 Income Before Extraordinary Items 63 98 NET INCOME (LOSS) 63 98 millions of US Dollars Current Assets 2019 2017 Cash and Short-Term Investments - To 107 99 Receivables - Total 57 85 Inventories - Total 281 280 Current Assets - Other - Total 24 19 Current Assets Total 469 483 Property Plant & Equipment - Total (N 888 886 Intangible Assets - Total 75 72 Non-Current Assets Total 963 958 ASSETS TOTAL 1,432 1,442 millions of US Dollars Current Liabilities 2017 Debt in Current Liabilities 0 0 Account Payable/Creditors - Trade 191 216 Current Liabilities - Other 76 58 Current Liabilities Total 267 274 Long-Term Debt Total 0 35 Deferred Taxes and Investment Tax Cre 91 87 Liabilities (Other) 51 52 Long-Term Liabilities Total 142 175 Liabilities Total 409 449 Common Stock issued 460 447 Retained Earnings 563 546 Shareholders' Equity Total 1,023 993 LIABILITIES & SHAREHOLDER EQUITY 1,432 1,442 $ 45.00 $ 42.00 28.8 28.5 X-4 Market Val. Stock / Tot Liabilities Stock Price Stk Shares mill. Market Capitalization Tot. Liabilities 98 277 16 484 878 X-4 > 69 1.0 947 1,431 X-5 Net Sales / Total Assets Revenue Tot Assets X-5 > 2019 2016 0 199 Individual Effort -no help 12 pts each year Calculate Free Cash Flow for 2 Yrs USE 25% INC.TAX RATE 2018 EBIT EBIT x (1 - 25 tax rate) 77 276 2017 64 119 44 228 505 417 510 927 1,431 Free Cash Flow Exam-3 At-Home Dec.3 NAME #3 Use Data provided to estimate the value of Firm ABC based on relative P/E ratio Enter 3 Answers into online Quiz Dec. 2-3 INDIVIDUAL EFFORT - NO HELP VALUE BY INDUSTRY COMPARABLES (MULTIPLES) NAME Firm A-B-C-D are Industry Peer firms Individual Effort - NO Help 20pts Use "Comparables" method to estimate firm X's stock price. Enter correct values in 'boxed' areas. S&P500 PE Multiples Valuation Estimate PE-annual PE-annua S&P500 Firm 'ABC 2020 21.6 15.5 2019 23.8 16.9 2018 19.4 14.8 2017 17.9 14.1 P/S P/E P/BK $000 Firm A Firm B Firm C Firm D Sales 130,000 148,000 95,000 112,000 Earnings Book Value Market Cap Value 14,000 115,000 150,000 10,500 105,000 175,000 9,000 85,000 120,000 9,700 92,000 135,000 Firm 'ABC' Relative P/E S&P500 20.68 Step-1 AVG PE +/- 10% range Firm X > S&P500 PE Firm 'ABC' Est'd PE $ 71,000 $ 8,000 $ 54,000 COMM SHARES 1,500 Firm X Estimated stock value ----> > Step-2 22.40 FORECAST 2021 Baseline OPTIM (+10 %) PESSIM (-10%) Step-3 Firm 'ABC' EPS Forecast Firm 'ABC' Est'd Stock Value 2021 Baselines 3.60 $ INCOME STATEMENT 2018 2017 2016 Sales/Turnover (Net) 3,509 3,467 3,137 Cost of Goods Sold 2,574 2,540 2,265 Gross Profit (Loss) 935 926 872 Selling, General and Administrative Exp 767 773 707 Operating Inc Before Depreciation 168 154 165 Depreciation and Amortization - Total 84 77 66 Operating Income After Depreciation 84 76 98 Interest - Net -2 3 27 Pret-Tax Income & Other 82 79 125 Income Taxes Expense (Credit) 19 -19 38 Income Before Extraordinary Items 63 98 87 NET INCOME (LOSS) 63 98 87 CASH FLOW STATEMENT (numbers in millions) OPERATING ACTIVITY 2018 2017 2016 Income Before Extraordi 63 98 87 Depreciation and Amort 94 85 77 Adjustments to Net Inco 8 -33 -17 Inventory - Decrease (In -1 -3 -38 Other Changes in Operat -15 17 42 OPERATING ACTIVITIES - 148 166 152 2017 96 INVESTING ACTIVITY Capital Expenditures Other Cash Flow from In INVESTING ACTIVITIES - 2018 96 5 -91 2016 142 -45 -187 -2 -97 2018 2017 32 FINANCING ACTIVITY Cash Dividends FINANCING ACTIVITIES - 2016 32 2017 2016 33 99 93 -68 -62 32 2018 107 57 281 85 280 Current Assets Cash and Short-Term Investments - To Receivables - Total Inventories - Total Current Assets - Other - Total Current Assets Total Non-Current Assets Property Plant and Equipment - Total Intangible Assets - Total Non-Current Assets Total ASSETS TOTAL 98 277 16 484 24 469 19 483 12pts ea.Calculate Free Cash Flow for 2 Yrs USE 25% INC.TAX RATE 2018 2017 EBIT EBIT x (1 - 25 tax rate) 888 886 878 75 72 69 963 958 947 1,432 1,442 1,431 Current Liabilities 2018 2017 2016 Free Cash Flow 2018 2017 Debt in Current Liabilities Account Payable/Creditors - Trade Current Liabilities - Other Current Liabilities Total Long-Term Debt Total Deferred Taxes and Investment Tax Cre Liabilities (Other) Long-Term Liabilities Total Liabilities Total Common Stock issued Retained Earnings Shareholders' Equity Total LIABILITIES & SHAREHOLDER EQUITY T 0 0 0 191 216 199 76 58 77 267 274 276 0 35 64 91 87 119 51 52 44 142 175 228 409 449 505 460 447 563 546 510 1,023 993 927 1,432 1,442 1,431 Additional data provided is Cash Flow Statement section at top 417
