Question
Valuation Using the PB Multiple Refer to information given below to complete the requirements. The following table provides summary data for Cerner Corporation and its
Valuation Using the PB Multiple Refer to information given below to complete the requirements. The following table provides summary data for Cerner Corporation and its competitors, Eclipsys Corporation and McKesson Corporation.
(in millions) | Center | Eclipsys | McKesson |
---|---|---|---|
Company assumed value | -- | $1,140 | $17,519 |
Equity assumed value | -- | $1,140 | $15,570 |
Net operating assets | $1,328 | $228 | $8,454 |
Book value of equity | $1,132 | $228 | $6,505 |
Net nonoperating obligations (assets) | $196 | $0 | $1,949 |
Common shares outstanding | 80.4 shares | 54.0 shares | 288.8 shares |
(a) Compute the PB ratio for both Eclipsys and McKesson. (Round your answers to two decimal places.) Eclipsys Answer McKesson Answer (b) Use Eclipsys and McKesson as comparables, along with the rounded PB ratios from part (a), and then estimate for Cerner its equity intrinsic value and its equity intrinsic value per share. (Round the equity intrinsic value to the nearest million and the value per share to the nearest cent.) Average of the two rounded ratios in (a) above Answer (Round to two decimal places.)
Using the rounded average calculated above, calculate the following: Equity intrinsic value $Answer million Equity intrinsic value per share $Answer
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