Please Highlight the answers I need to put in the cells and follow the format plsssss and thank you~ > 2 Required information [The following information applies to the questions displayed below.] 10 points Skipped Davidson Yachts is a small company founded by two businesspeople who are friends and avid sailors. At present, they are interested in expanding the business and have asked you to review its financial statements. Davidson Yachts sells approximately 220 to 270 sailboats each year, ranging from 15-foot dinghies to 21-foot sailboats. Their sales prices range from $3,300 to more than $11,300. The company has a limited inventory of boats consisting primarily of one or two boats from each of the four manufacturers that supply Davidson. The company also sells a variety of supplies and parts and performs different types of service. Most sales are on credit. The company operates from a large building that has offices, storage, and sales space for some of the smaller Sailboats. The larger sailboats are kept in a fenced area adjacent to the main building, and an ample parking area is nearby. This year, Davidson purchased a boat lift to haul boats. The lift has brought in revenues for boat repairs, hull painting, and related services, as well as the boat hauls. The balance sheet and income statement for Davidson Yachts for 2014-2019 follow. The increase in net fixed assets in the recent 2 years is due to improvements in the building, paving of the parking area, and the purchase of the lift. 2015 23,266 2019 $ 32,564 145, 309 184,264 (10,736 (13,806) Cash Accounts receivable Allowance for bad debts Inventory Other current assets Total current assets Property and equipment Accumulated depreciation Total assets Accounts payable Taxes payable Short-term loans Accrued payroll payable Total current liabilities Long-term debt Equity Total liabilities and equity DAVIDSON YACHTS COMPANY Comparative Balance Sheet December 31 2014 2016 $ 24,560 $ $ 20,035 100, 765 114,463 (9,954) (9,474) 36, 309 58,214 63,352 13,194 14,324 10,584 $164,874 $189, 332 $ 198,960 263,495 283,308 300,680 (67,284) (94,742) (124,192) $361,085 $377,898 $ 375,448 $ 83,935 $ 79,557 $ 64,906 12,93 12,283 13,080 61,176 58,280 38,883 2017 $ 29,726 127,353 (11,916) 69,574 12,696 $ 227,433 369,865 (159, 399) $ 437,899 $ 57,946 15,383 42,393 2018 $ 44,992 105,688 (7,932) 60, 294 20,223 $ 223,265 406,569 (188,527) $441,307 $ 41,489 5,038 98,284 24,333 $ 286,684 499,926 (228,607) $ 557,923 $ 51,974 17,432 78,262 6,579 $ 154,247 263,558 140, 118 $ 557,923 6,527 5,898 4,949 5,524 50,894 6,074 $164,568 159,473 37,044 $361,085 $156,018 173,688 48,192 $377,898 $ 121,818 180,790 72,840 $ 375,448 $ 121,246 216,297 100, 356 $ 437,899 $ 103,495 230, 771 107,041 $441,307 Skipped 2019 955,357 48,680 534,497 2400 $ 40,210 $256,593 $372, 180 $ 29,588 $ 29,258 21,695 25,019 29,123 19,687 10,736 DAVIDSON YACHTS COMPANY Comparative statement of Income and Operating Cash Flow For the Years Ended December 31 2014 2015 2016 2017 2018 Sales $774,080 --- $731,378 $783,980 $935,978 Returns and allowances 771, 110 39,679 36,945 41,634 47,298 34,187 Cost of sales 477,808 445,198 461,915 549,678 457,569 Gross margin Depreciation expense $249,235 $280,431 $339,002 $279,354 Interest expense $ 29,285 $ 27,588 $ 35,337 18,727 21,128 Salaries and wages 82,053 73,794 77,976 95,894 93,033 Accounting and legal 9,954 9,453 11,964 Administration expense 13,238 79,796 75,364 80,823 96,599 88,125 Other expense 12,760 19,057 15,893 23,033 19,064 Total expense $232,495 $226, 226 $234,853 $284,432 $267,737 Net income $ 24,098 $ 23,009 $ 45,578 $ 54,570 $ 11,617 Cash flow from operations (adjustments to net income) Depreciation $ 27,588 $ 29,580 $ 35,337 $ 29,258 Decrease (increase) in receivables (2,717) (11,461) (10,448) 17,681 Decrease (increase) in inventory (21,905) (5,138) (6,222) 9,280 Decrease (increase) in other current assets (1,130) 3,740 (2,112) (7,527) Increase (decrease) in current liabilities (8,550) (34,200) (572) (17,751) $ 16,295 $ 28,099 $ 70,553 $ 42,558 101,577 11,510 97,571 22,792 $302,783 $ 69,397 $ 40, 210 (33,747) (37,910) (4,110) 50,752 $ 84,592 The company obtains its debt financing from two sources: (1) a small savings and loan for its short-term funds and (2) a larger commercial bank, also for short-term loans, but principally for long-term financing. The terms of the loan agreement with the bank include a restriction that Davidson's current ratio must remain higher than 1.5. Required: 1. What is the valuation of Davidson Yachts Company using the book value of equity method? 2. What is the valuation of Davidson Yachts Company using the multiples-based method on earnings? Assume the industry average earnings multiple is 7. Use the median value of the most recent 3 years for earnings. 3. What is the valuation of Davidson Yachts Company using 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 3 years for cash flow. Valuation 1. Valuation Method Net book value of equity Earnings multiple Operating cash flow multiple 2. 3. 2 Required information [The following information applies to the questions displayed below.] 10 points Skipped Davidson Yachts is a small company founded by two businesspeople who are friends and avid sailors. At present, they are interested in expanding the business and have asked you to review its financial statements. Davidson Yachts sells approximately 220 to 270 sailboats each year, ranging from 15-foot dinghies to 21-foot sailboats. Their sales prices range from $3,300 to more than $11,300. The company has a limited inventory of boats consisting primarily of one or two boats from each of the four manufacturers that supply Davidson. The company also sells a variety of supplies and parts and performs different types of service. Most sales are on credit. The company operates from a large building that has offices, storage, and sales space for some of the smaller Sailboats. The larger sailboats are kept in a fenced area adjacent to the main building, and an ample parking area is nearby. This year, Davidson purchased a boat lift to haul boats. The lift has brought in revenues for boat repairs, hull painting, and related services, as well as the boat hauls. The balance sheet and income statement for Davidson Yachts for 2014-2019 follow. The increase in net fixed assets in the recent 2 years is due to improvements in the building, paving of the parking area, and the purchase of the lift. 2015 23,266 2019 $ 32,564 145, 309 184,264 (10,736 (13,806) Cash Accounts receivable Allowance for bad debts Inventory Other current assets Total current assets Property and equipment Accumulated depreciation Total assets Accounts payable Taxes payable Short-term loans Accrued payroll payable Total current liabilities Long-term debt Equity Total liabilities and equity DAVIDSON YACHTS COMPANY Comparative Balance Sheet December 31 2014 2016 $ 24,560 $ $ 20,035 100, 765 114,463 (9,954) (9,474) 36, 309 58,214 63,352 13,194 14,324 10,584 $164,874 $189, 332 $ 198,960 263,495 283,308 300,680 (67,284) (94,742) (124,192) $361,085 $377,898 $ 375,448 $ 83,935 $ 79,557 $ 64,906 12,93 12,283 13,080 61,176 58,280 38,883 2017 $ 29,726 127,353 (11,916) 69,574 12,696 $ 227,433 369,865 (159, 399) $ 437,899 $ 57,946 15,383 42,393 2018 $ 44,992 105,688 (7,932) 60, 294 20,223 $ 223,265 406,569 (188,527) $441,307 $ 41,489 5,038 98,284 24,333 $ 286,684 499,926 (228,607) $ 557,923 $ 51,974 17,432 78,262 6,579 $ 154,247 263,558 140, 118 $ 557,923 6,527 5,898 4,949 5,524 50,894 6,074 $164,568 159,473 37,044 $361,085 $156,018 173,688 48,192 $377,898 $ 121,818 180,790 72,840 $ 375,448 $ 121,246 216,297 100, 356 $ 437,899 $ 103,495 230, 771 107,041 $441,307 Skipped 2019 955,357 48,680 534,497 2400 $ 40,210 $256,593 $372, 180 $ 29,588 $ 29,258 21,695 25,019 29,123 19,687 10,736 DAVIDSON YACHTS COMPANY Comparative statement of Income and Operating Cash Flow For the Years Ended December 31 2014 2015 2016 2017 2018 Sales $774,080 --- $731,378 $783,980 $935,978 Returns and allowances 771, 110 39,679 36,945 41,634 47,298 34,187 Cost of sales 477,808 445,198 461,915 549,678 457,569 Gross margin Depreciation expense $249,235 $280,431 $339,002 $279,354 Interest expense $ 29,285 $ 27,588 $ 35,337 18,727 21,128 Salaries and wages 82,053 73,794 77,976 95,894 93,033 Accounting and legal 9,954 9,453 11,964 Administration expense 13,238 79,796 75,364 80,823 96,599 88,125 Other expense 12,760 19,057 15,893 23,033 19,064 Total expense $232,495 $226, 226 $234,853 $284,432 $267,737 Net income $ 24,098 $ 23,009 $ 45,578 $ 54,570 $ 11,617 Cash flow from operations (adjustments to net income) Depreciation $ 27,588 $ 29,580 $ 35,337 $ 29,258 Decrease (increase) in receivables (2,717) (11,461) (10,448) 17,681 Decrease (increase) in inventory (21,905) (5,138) (6,222) 9,280 Decrease (increase) in other current assets (1,130) 3,740 (2,112) (7,527) Increase (decrease) in current liabilities (8,550) (34,200) (572) (17,751) $ 16,295 $ 28,099 $ 70,553 $ 42,558 101,577 11,510 97,571 22,792 $302,783 $ 69,397 $ 40, 210 (33,747) (37,910) (4,110) 50,752 $ 84,592 The company obtains its debt financing from two sources: (1) a small savings and loan for its short-term funds and (2) a larger commercial bank, also for short-term loans, but principally for long-term financing. The terms of the loan agreement with the bank include a restriction that Davidson's current ratio must remain higher than 1.5. Required: 1. What is the valuation of Davidson Yachts Company using the book value of equity method? 2. What is the valuation of Davidson Yachts Company using the multiples-based method on earnings? Assume the industry average earnings multiple is 7. Use the median value of the most recent 3 years for earnings. 3. What is the valuation of Davidson Yachts Company using 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 3 years for cash flow. Valuation 1. Valuation Method Net book value of equity Earnings multiple Operating cash flow multiple 2. 3