Question
Using the chop shop method, please determine a firms value for Acapulco , Inc . Whose common stock is trading at a total market price
Using the chop shop method, please determine a firms value for Acapulco, Inc.
Whose common stock is trading at a total market price of 4 million. For Acapulco, the accounting data are divided into three business segments as given below in the tables. Data for the firms three segments are as follows:
Business segments | Segments Sales ($000) | Segments Assets ($000) | Segments Earnings before Interest and Taxes (EBIT) |
Consumer wholesale | 2300 | 1900 | 650 |
Specialty services | 1900 | 1400 | 750 |
Retirement centers | 2500 | 2,100 | 800 |
Total | 6700 | 5400 | 2200 |
Industry data for pure-play firms have been computed and are summarized as follows:
Business segments | Firm Value/Sales | Firm value/Assets | Firm Value/ EBIT |
Consumer wholesale | 1.2 | 1.1 | 8 |
Specialty services | 0.8 | 0.7 | 6 |
Retirement centers | 1.5 | 1.5 | 12 |
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