Using the Texas Instruments Inc. 2015 annual report and financial statements , define economic value and explain how an adjusted book value approach to valuing assets and liabilities moves book value nearer to economic value. You are required to provide a written response which highlights four specific elements in Texas Instruments balance sheet that might need to be adjusted to arrive at an economic value.

For each element, explain the type of adjustment and the type of information that might be required before an adjustment could be made to arrive at an economic value for Texas Instruments at its 2015 financial year-end.

b.Calculate the following market multiple ratios for Texas Instruments Inc. at its 2015 financial year-end:

i.EV/EBITDA

ii.Price-to-earnings ratio (PE ratio)

iii.Price-to-cash-flow ratio

iv.Contrast and explain the results of the different market multiple ratios that you calculated. Evaluate the usefulness of market multiple ratios in company valuation.

Consolidated Balance Sheets MIlomsofdolars acept sham amounts) Curent assets: Cash and cash equivalents Short-term investments Accounts receivable, net of alowances of (ST and (S12) Raw materials Prepaid expenses and other current assets Total current assets Property, plant and equipment at cost Property, plant and equipment, net Long-term investments Goodwill, net on-related intangibles, net Capitalized software licenses, net Overfunded retirement plans Other assets otal assets Liabilities and stockholders' equity Curent liabilities: Current portion of long-term debt Accounts payable Accrued compensation Income taxes payable Accrued expenses and other liabilities Total current liabilities Long-term debt Underfunded retirement plans Deferred income taas Deferred credits and otherliabiites otal liabilities Stockholders' equity Preferred stock $25 par value Authorized 10,000,000 shares Participating cumulative preferred. None issued. Common stock, $1 par value Authorized 2,400,000,000 shares Shares issued 740,815,939 Paid-in capital Retained eamings Treasury common stock at cost Shares: 2015 -729,547,527; 2014-694,189,127 Accumulated other comprehensive income loss, net oftares (A0C0 Total stockholdens equity Total liabilities and stockholders equity See accompanying notes. 1,000 1,1 2,218 2,342 1,165 1,246 109 101 846 736 1691 1,784 1.000 7.074 7421 2S96 2,840 4,362 1,583 1,902 201 180 127 $16,230 $17,372 1,000 1,001 410 498 2,555 2,658 3,120 3,630 196 37 376 6284 6,982 1,741 1,741 1,629 1,368 31,176 29,653 (24.068) 121,840) 9,946 10,390 16230