Question The most recent statement of financial position for Imperial plc is given in the following table. Imperial is a public-listed fimm which manufacture drugs to cure Covid-19 disease: Statement of financial position as at 30 June 2020 f million f million million 100 240 340 Assets utilised Fixed (non-current) assets Tangible Intangible Current assets Stocks and work-in- progress Accounts Receivables Bank Current liabilities Accounts Payable Bank overdraft Net current assets 10% bond Net assets 160 40 10 210 (20) (40) (60) 150 (80) 410 0 200 Ordinary equity (25pence par value) Share premium account Reserves Investors' funds 100 110 410 Further information: 1. 600 million sales was made in 2019 with a margin of 50% 2. Corporation tax rate is thirty-three percent. 3. Sales range is between 300 million and 700 million for the past five years. 4. Revaluation of tangible fixed assets = 130 million. 5. Significant patent worth forty million pounds expiring in April 2021. 6. Fifty percent of working capital without any signed contracts. 7. Drug research companies have average P-E ratio of 44:1. Pharmaceutical companies have a ratio of 28:1. The firm's P:E ratio is 40:1. 8. Depreciation of fixed assets = 10 million per year. Depreciation of intangible a9gets = 50 million per year 9. Interest charge for overdraft = 3%. 10. Annual capital investment = 10 million. Required: Find out the value of the firm based upon the following methods: NAV (5 marks) PE ratio (9 marks) Comment on the firm valuation based upon the two methods used. (5 marks) Evaluate to what extent Imperial plc can be valued accurately by capital markets. (6 marks) [Total: 25 marks] Question The most recent statement of financial position for Imperial plc is given in the following table. Imperial is a public-listed fimm which manufacture drugs to cure Covid-19 disease: Statement of financial position as at 30 June 2020 f million f million million 100 240 340 Assets utilised Fixed (non-current) assets Tangible Intangible Current assets Stocks and work-in- progress Accounts Receivables Bank Current liabilities Accounts Payable Bank overdraft Net current assets 10% bond Net assets 160 40 10 210 (20) (40) (60) 150 (80) 410 0 200 Ordinary equity (25pence par value) Share premium account Reserves Investors' funds 100 110 410 Further information: 1. 600 million sales was made in 2019 with a margin of 50% 2. Corporation tax rate is thirty-three percent. 3. Sales range is between 300 million and 700 million for the past five years. 4. Revaluation of tangible fixed assets = 130 million. 5. Significant patent worth forty million pounds expiring in April 2021. 6. Fifty percent of working capital without any signed contracts. 7. Drug research companies have average P-E ratio of 44:1. Pharmaceutical companies have a ratio of 28:1. The firm's P:E ratio is 40:1. 8. Depreciation of fixed assets = 10 million per year. Depreciation of intangible a9gets = 50 million per year 9. Interest charge for overdraft = 3%. 10. Annual capital investment = 10 million. Required: Find out the value of the firm based upon the following methods: NAV (5 marks) PE ratio (9 marks) Comment on the firm valuation based upon the two methods used. (5 marks) Evaluate to what extent Imperial plc can be valued accurately by capital markets. (6 marks) [Total: 25 marks]