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What is the company's value using the following methods?
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a) Residual Income
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b) Free Cash Flow (FCFF and FCFE) Assume no change in cash liquidity
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c) Valuation Ratios (Market Multiples), use at least three ratios.
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d) which one of the above valuation methods provides a better
and more realistic valuation based on the solutions and data.
Income Statements Revenues Year 1 $2,173,600 1,395,708 $777,892 Year 2 $2,282,280 1,490,980 $791,300 Year 3 Year 4 $2,396,394 $2,516,214 1,578,910 1,685,954 $817,484 $830,259 Year 5 $2,667,024 1,814,508 $852,516 Cost of Sales Gross Profit Accounting Advertising & Promotion Bank Charges $6,240 $47.759 $43.156 $6,552 $42.640 $45,314 $6,880 $40,363 $47,579 Compensation & Benefits $256.509 $264.204 $272,130 $7,224 $37,778 $49,958 $280,294 $0 $1,204 $349,440 $7,585 $34,853 $52,457 $288,702 $0 $1,265 $349,440 Consulting Fees Insurance $2,496 $1,040 $349,440 $0 $1,092 $349,440 $0 $1,147 $349,440 Lease - Facilities Legal & Professional Licenses & Fees 500 500 500 500 500 500 510 520 531541 Maintenance 600 612 624 637 649 Miscellaneous 1,800 1,836 1,873 1,948 Office supplies 2,700 2,809 1,910 2,865 787 1,910 Security 2,754 742 1,836 720 764 2,923 810 1,948 Telephone 1,800 1,873 Utilities 4,200 4.410 4,631 4,862 5.105 Website Total Operating Exp. EBIDTA 1,800 721,260 $56,633 4,916 $51,717 11040 1,800 724,242 $67,058 4,916 $62,142 10488 1,800 732,932 $84,552 ,916 $79,636 9936 1,800 741,700 $88,560 4,916 $83,644 1,800 750,525 $101,991 4,916 $97,075 Depreciation 4 Operating Profit Interest Expense 9384 8832 Earnings Before Taxes 40,677 51,654 69,700 74,260 88,243 Income Taxes Net Income 8,542 $32,135 10,847 $40,807 14,637 $55,063 15,595 $58,665 18,531 $69,712 Balance Sheets Cash Inventory Total Current Assets Begin $33,150 77,000 $110,150 Year 1 $50,685 191,916 $242,601 Year 2 80,307 213,416 $293,723 Year 3 122,461 237,641 $360,102 Year 4 166,233 264,950 $431,183 Year 5 239,914 278, 197 $518,111 Fixed Assets Less: Depreciation Net Fixed Assets Total Assets 33,850 0 33,850 144,000 33,850 4,916 28,934 271,535 33,850 9,832 24,018 317,741 33,850 14,748 19,102 379,204 33,850 19,664 14,186 445,369 33,850 24,580 9,270 527,381 100,000 87,400 110,000 82,800 121,000 78,200 133, 100 73,600 150,000 69,000 92,000 Accounts Payable Long Term Debt Total Liabilities 92,000 187,400 192,800 199,200 206,700 219,000 Owner's Equity Paid in Capital Retained Earnings Total Liabilities & Equity 52,000 0 52,000 32,135 52,000 72,941 52,000 128,004 52,000 186,669 52,000 256,381 $144,000 $271,535 $317,741 $379,204 $445,369 $527,381 Income Statements Revenues Year 1 $2,173,600 1,395,708 $777,892 Year 2 $2,282,280 1,490,980 $791,300 Year 3 Year 4 $2,396,394 $2,516,214 1,578,910 1,685,954 $817,484 $830,259 Year 5 $2,667,024 1,814,508 $852,516 Cost of Sales Gross Profit Accounting Advertising & Promotion Bank Charges $6,240 $47.759 $43.156 $6,552 $42.640 $45,314 $6,880 $40,363 $47,579 Compensation & Benefits $256.509 $264.204 $272,130 $7,224 $37,778 $49,958 $280,294 $0 $1,204 $349,440 $7,585 $34,853 $52,457 $288,702 $0 $1,265 $349,440 Consulting Fees Insurance $2,496 $1,040 $349,440 $0 $1,092 $349,440 $0 $1,147 $349,440 Lease - Facilities Legal & Professional Licenses & Fees 500 500 500 500 500 500 510 520 531541 Maintenance 600 612 624 637 649 Miscellaneous 1,800 1,836 1,873 1,948 Office supplies 2,700 2,809 1,910 2,865 787 1,910 Security 2,754 742 1,836 720 764 2,923 810 1,948 Telephone 1,800 1,873 Utilities 4,200 4.410 4,631 4,862 5.105 Website Total Operating Exp. EBIDTA 1,800 721,260 $56,633 4,916 $51,717 11040 1,800 724,242 $67,058 4,916 $62,142 10488 1,800 732,932 $84,552 ,916 $79,636 9936 1,800 741,700 $88,560 4,916 $83,644 1,800 750,525 $101,991 4,916 $97,075 Depreciation 4 Operating Profit Interest Expense 9384 8832 Earnings Before Taxes 40,677 51,654 69,700 74,260 88,243 Income Taxes Net Income 8,542 $32,135 10,847 $40,807 14,637 $55,063 15,595 $58,665 18,531 $69,712 Balance Sheets Cash Inventory Total Current Assets Begin $33,150 77,000 $110,150 Year 1 $50,685 191,916 $242,601 Year 2 80,307 213,416 $293,723 Year 3 122,461 237,641 $360,102 Year 4 166,233 264,950 $431,183 Year 5 239,914 278, 197 $518,111 Fixed Assets Less: Depreciation Net Fixed Assets Total Assets 33,850 0 33,850 144,000 33,850 4,916 28,934 271,535 33,850 9,832 24,018 317,741 33,850 14,748 19,102 379,204 33,850 19,664 14,186 445,369 33,850 24,580 9,270 527,381 100,000 87,400 110,000 82,800 121,000 78,200 133, 100 73,600 150,000 69,000 92,000 Accounts Payable Long Term Debt Total Liabilities 92,000 187,400 192,800 199,200 206,700 219,000 Owner's Equity Paid in Capital Retained Earnings Total Liabilities & Equity 52,000 0 52,000 32,135 52,000 72,941 52,000 128,004 52,000 186,669 52,000 256,381 $144,000 $271,535 $317,741 $379,204 $445,369 $527,381
