TB MC Qu. 20-75 (Algo) The value of the company, calculated using the free cash flow 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 $60,600 per year and made capital expenditures in both years of $30,200 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 1,800,000 shares of outstanding stock at the end of 2022 Balance Sheet, December 31, 2022 2021 Cash $ 342,000 $ 102,000 Accounts Receivable $ 352,000 $ 402,000 Inventory $ 252,000 $ 302,000 Total Current Assets $ 946,000 Long-lived Assets Total Assets Current Liabilities Long-term Debt Shareholder Equity Total Debt and Equity 1,100,000 $ 2,046,000 $ 202,000 602,000 1,242,000 $ 2,046,000 Income Statement, for year ended December 31, Sales Cost of Sales Gross Margin Operating Expenses Operating Income Taxes Net Income 2022 $ 4,760,000 4,108,000 652,000 351,000 2021 $ 806,000 1,120,000 $ 1,926,000 $ 302,000 502,000 1,122,000 $ 1,926,000 $ 4,510,000 4,008,000 502,000 401,000 301,000 101,000 120,400 40,400 $ 180,600 $ 60,600 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 free cash flow multiple for 2022 is: 2022 $ 180,600 50,000 100,000 (-100,000) $ 230,600 2021 $ 60,600 50,000 0 0 $ 110,600