Question
The company Bacall has forecasted Sales of 11 Million and an operating income of 1Million for the next year. The Net working capital is a
The company Bacall has forecasted Sales of 11 Million and an operating income of 1Million for the next year.
The Net working capital is a 22% of sales, their CAPEX is based on a 6% over Sales.
Their expected growth for the next 2 years is a 7% growth on sales and on Operating income.
The forecasted depreciation is 7% of Operating income.
They have not done a forecast for the year 4 and subsequent, but they expect a cash flow growth of 1.5% forever as from year 4 onwards.
The applicable tax rate is 15%.
The company has a WACC of 11%.
The company has 65.000 shares outstanding, and you are requested to estimate/calculate the PE ratio.
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
To calculate the PE ratio we first need to calculate the expected earnings per share EPS for the nex...
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
