Question
Review the financial statements below 2016 Income Statement Sales 2,000 COGS 1,500 EBIT 500 Interest expense 20 Taxable income 480 Taxes 192 Net Income 288
Review the financial statements below
2016 Income Statement
Sales
2,000
COGS
1,500
EBIT
500
Interest expense
20
Taxable income
480
Taxes
192
Net Income
288
2016 Balance Sheet
Cash
100
Accounts payable
150
Accounts receivable
70
Total current liabilities
150
Inventory
130
Total current assets
300
Long-term debt
250
Common stock
100
Fixed assets
700
Retained earnings
500
Total stockholders equity
600
Total
1000
Total
1000
2017 Statement of Cash Flows
Operating activities:
Net Income
288
Depreciation
70
Change in accounts receivable
30
Change in inventory
(60)
Change in accounts payable
20
Cash flow from operating activities
348
Investing activities:
Capital expenditures
(250)
Cash flow from investing activities
(250)
Financing activities
Repayment of borrowing
(18)
Cash flow from financing activities
(18)
1. Assume that future free cash flow will grow at 4% per year and their cost of capital is 14%, and estimate the fair market value as of year-end 2016. What is the enterprise value?
2. Approximate the firms stock price, if there are 100 shares outstanding, what is the stock price?
Review the financial statements below
2016 Income Statement | |
Sales | 2,000 |
COGS | 1,500 |
EBIT | 500 |
Interest expense | 20 |
Taxable income | 480 |
Taxes | 192 |
Net Income | 288 |
2016 Balance Sheet | |||||
Cash | 100 |
| Accounts payable | 150 | |
Accounts receivable | 70 |
| Total current liabilities | 150 | |
Inventory | 130 |
|
|
| |
Total current assets | 300 |
| Long-term debt | 250 | |
|
|
| Common stock | 100 | |
Fixed assets | 700 |
| Retained earnings | 500 | |
|
|
| Total stockholders equity | 600 | |
Total | 1000 |
| Total | 1000 |
2017 Statement of Cash Flows | |
Operating activities: |
|
Net Income | 288 |
Depreciation | 70 |
Change in accounts receivable | 30 |
Change in inventory | (60) |
Change in accounts payable | 20 |
Cash flow from operating activities | 348 |
|
|
Investing activities: |
|
Capital expenditures | (250) |
Cash flow from investing activities | (250) |
|
|
Financing activities |
|
Repayment of borrowing | (18) |
Cash flow from financing activities | (18) |
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