Williams Company is a manufacturer of auto parts having the following financial statements for 2021-2022. 2021 $ 151,000 241,000 Balance Sheet December 31 2022 Cash $ 276,000 Accounts receivable 166,000 Inventory 401,000 Total current assets $ 843,000 Long-lived assets 1,800,000 Total assets 2,643,000 Current liabilities 392,000 Long-term debt 900,000 Shareholders' equity 1,351,000 Total debt and equity $ 2,643,000 191,000 $ 583,000 1,660,000 $ 2,243,000 335,000 960,000 948,000 $ 2,243,000 Income Statement For the years ended December 31 2022 Sales $ 3,660,000 Cost of sales 2,820,000 Gross margin 840,000 Operating expenses * 516,000 Operating income 324,000 Taxes 113,400 Net income $ 210, 600 2021 $ 3,760,000 2,920,000 840,000 274,000 566,000 198,100 $ 367,900 Cash Flow from Operations 2021 $ 367,900 130,000 Net income Plus depreciation expense + Decrease (-increase) in accounts receivable and inventory + Increase (decrease) in current liabilities Cash flow from operations 2022 $ 210,600 140,000 (135,000) 57,000 $ 272,600 $ 497,900 *Operating expenses include depreciation expense. Additional financial information, including industry averages for 2022, where appropriate, includes: Industry 2022 35.09 2022 $ 170,000 35% $ 140,000 $ 34,000 $ 3.85 1,960,000 2021 $ 260,000 35% $ 130,000 $ 34,000 $ 4 1,960,000 25.00 1.50 18.00 9.00 Capital expenditures Income tax rate Depreciation expense Dividends Year-end stock price Number of outstanding shares Sales multiplier Free cash flow multiplier Earnings multiplier Cost of capital accounts recer Accounts receivable turnover Inventory turnover Current ratio Quick ratio xu Cash flow from operations ratio Free cash flow ratio 100 Gross margin percentage Return on assets (net book value) Return on equity 5% 5% 11.10 10.50 2.30 4-30 1.90 1.20 1.10 30.0% 20.08 30.08 Required: Develop a business valuation for Williams Company for 2022 using the following methods: (1) book value of equity, (2) market value of equity, (3) discounted cash flow (DCF), (4) enterprise value, and (5) all the multiples-based valuations for which there is an industry average multiplier. For the calculation of the DCF valuation, you may use the simplifying assumption that free cash flows will continue indefinitely at the amount in 2022. Answer is complete but not entirely correct. $ 1,351,000 7,546,000 102,600 X 6,922,000 X Book value of equity Market value of equity Discounted free cash flows Enterprise value Multiples-based valuation Earnings multiple Free cash flow multiple Sales multiple 1,895,400 1,846,800 5,490,000
