TB MC Qu. 20-74 (Algo) The value of the company, calculated using the earnings multiple: The Sleep Company The Sleep Company had the following operating results for 2021-2022. In addition, the company paid dividends in both 2021 and 2022 of $62,400 per year and made capital expenditures in both years of $30,000 per year. The company's stock price in 2021 was $8 and $7 In 2022. The Industry average earnings multiple for the mattress Industry was 9 In 2022 and the free cash flow and sales multiples were 18 and 1.5, respectively. The company is publicly owned and has 1,000,000 shares of outstanding stock at the end of 2022. Balance Sheet, December 31, 2022 2021 Cash $ 348,000 $ 108,000 Accounts Receivable $ 358,000 $ 408,000 Inventory $ 258,000 $ 308,000 Total Current Assets $ 964,000 Long-lived Assets Total Assets Current Liabilities Long-term Debt Shareholder Equity Total Debt and Equity 1,160,000 $ 2,124,000 $ 208,000 608,000 1,308,000 $ 2,124,000 Income Statement, for year ended December 31, Sales Cost of Sales 2022 $ 4,790,000 4,132,000 658,000 2021 $ 824,000 1,180,000 $ 2,004,000 $ 308,000 508,000 1,188,000 $ 2,004,000 $ 4,540,000 4,032,000 508,000 Gross Margin Operating Expenses Operating Income Taxes Net Income 354,000 404,000 304,000 104,000 121,600 41,600 $ 182,400 $ 62,400 Cash Flow From Operations Net Income Plus Depreciation Expense + Decrease (-increase) in Accounts Receivable and Inventory + Increase (-decrease) in Current Liabilities Cash Flow from Operations The value of the company, calculated using the earnings multiple for 2022 is: 2022 $ 182,400 50,000 100,000 (-100,000) $ 232,400 2021 $ 62,400 50,000 0 $ 112,400