Use the following financial statement excerpts for questions 13-17: \begin{tabular}{|l|r|r|} \hline Meower's & & \\ \hline INCOME STATEMENTS: & & \\ \hline Revenue: & 2020 & 2021 \\ \hline COGS & 1,020,938 & 1,335,065 \\ \hline Gross Profit & 357,328 & 425,865 \\ \hline Depreciation & 663,610 & 909,200 \\ \hline SG\&A & 10,600 & 10,600 \\ \hline R\&D & 357,328 & 535,993 \\ \hline EBIT & 102,094 & 153,141 \\ \hline Interest & 193,588 & 209,466 \\ \hline Pretax Profit & 9,000 & 12,000 \\ \hline Tax Expense (21\%) & 184,588 & 197,466 \\ \hline Net Income & 38,763 & 41,468 \\ \hline & 145,825 & 155,998 \\ \hline & & \\ \hline BALANCE SHEETS: & & \\ \hline Cash & 2019 & \\ \hline Accounts Receivable & 302,762 & 2020 \\ \hline Inventory & 772,822 & 509,860 \\ \hline Current Assets & 610,725 & 972,607 \\ \hline PP\&E & 1,686,309 & 629,046 \\ \hline Goodwill & 11,670,501 & 2,111,513 \\ \hline ASSETS & 30,000 & 11,787,206 \\ \hline accounts payable & 13,386,810 & 30,000 \\ \hline debt & 915,757 & 13,928,719 \\ \hline LIABILITIES & 3,816,045 & 1,067,369 \\ \hline Shareholder Equity & 4,731,802 & 4,050,344 \\ \hline \end{tabular} 13. Which of the following statement of cashflows is for the above company, Meower's? 14. How much cash did Meower's actually receive from customers in 2021 ? a. $207,098 b. $1,335,065 c. $1,135,280 d. $1,534,850 15. John Meower wants to sell 20% of the ownership of Meower's to a private equity fund. He is exploring different ways of valuing the investment. He decides to set the price based on book value. So, 20% of $8.8 million, works out to be $1.76 million. Why is this a good way to proceed? a. This method might be acceptable if the company was working off of an IFRS GAAP balance sheet using revaluation model b. This method might be acceptable if the company prepared their financial statements using U.S. GAAP. c. This method might be acceptable if the company had been in business for a long time and the assets were fully depreciated. 16. John Meower wants to sell 20% of the ownership of Meower's to a private equity fund. He is exploring different ways of valuing the investment. He decides to price it based on an earnings multiple of 10x because many other similar businesses are trading at 10x and they all follow U.S. GAAP. So, 10x Net income of $155k, equals $1.55 million. 20% of that works out to be $3.1 million. a. This method might not be acceptable because other companies might pay larger dividends. b. This method might not be acceptable because other companies might be located in different regions. c. This method might not be acceptable because other companies might capitalize costs that Meower expenses. Use the following financial statement excerpts for questions 13-17: \begin{tabular}{|l|r|r|} \hline Meower's & & \\ \hline INCOME STATEMENTS: & & \\ \hline Revenue: & 2020 & 2021 \\ \hline COGS & 1,020,938 & 1,335,065 \\ \hline Gross Profit & 357,328 & 425,865 \\ \hline Depreciation & 663,610 & 909,200 \\ \hline SG\&A & 10,600 & 10,600 \\ \hline R\&D & 357,328 & 535,993 \\ \hline EBIT & 102,094 & 153,141 \\ \hline Interest & 193,588 & 209,466 \\ \hline Pretax Profit & 9,000 & 12,000 \\ \hline Tax Expense (21\%) & 184,588 & 197,466 \\ \hline Net Income & 38,763 & 41,468 \\ \hline & 145,825 & 155,998 \\ \hline & & \\ \hline BALANCE SHEETS: & & \\ \hline Cash & 2019 & \\ \hline Accounts Receivable & 302,762 & 2020 \\ \hline Inventory & 772,822 & 509,860 \\ \hline Current Assets & 610,725 & 972,607 \\ \hline PP\&E & 1,686,309 & 629,046 \\ \hline Goodwill & 11,670,501 & 2,111,513 \\ \hline ASSETS & 30,000 & 11,787,206 \\ \hline accounts payable & 13,386,810 & 30,000 \\ \hline debt & 915,757 & 13,928,719 \\ \hline LIABILITIES & 3,816,045 & 1,067,369 \\ \hline Shareholder Equity & 4,731,802 & 4,050,344 \\ \hline \end{tabular} 13. Which of the following statement of cashflows is for the above company, Meower's? 14. How much cash did Meower's actually receive from customers in 2021 ? a. $207,098 b. $1,335,065 c. $1,135,280 d. $1,534,850 15. John Meower wants to sell 20% of the ownership of Meower's to a private equity fund. He is exploring different ways of valuing the investment. He decides to set the price based on book value. So, 20% of $8.8 million, works out to be $1.76 million. Why is this a good way to proceed? a. This method might be acceptable if the company was working off of an IFRS GAAP balance sheet using revaluation model b. This method might be acceptable if the company prepared their financial statements using U.S. GAAP. c. This method might be acceptable if the company had been in business for a long time and the assets were fully depreciated. 16. John Meower wants to sell 20% of the ownership of Meower's to a private equity fund. He is exploring different ways of valuing the investment. He decides to price it based on an earnings multiple of 10x because many other similar businesses are trading at 10x and they all follow U.S. GAAP. So, 10x Net income of $155k, equals $1.55 million. 20% of that works out to be $3.1 million. a. This method might not be acceptable because other companies might pay larger dividends. b. This method might not be acceptable because other companies might be located in different regions. c. This method might not be acceptable because other companies might capitalize costs that Meower expenses
