Question
You have been asked to value price of Hyundai Motor Company, a large privately-held automobile manufacturer. Due to lack of data regarding the company, you
You have been asked to value price of Hyundai Motor Company, a large privately-held automobile manufacturer. Due to lack of data regarding the company, you collect information about three publicly traded car manufacturers. All firms operate only in the automobile industry. The data on Hyundai and the three other car manufacturers are presented below (all quoted dollars are in millions) :
| Toyota | Honda | Ford | Hyundai | |
| Cash | 6.8 | 4.4 | 9.1 | --- |
| Sales | 23.5 | 36.3 | 14.9 | 21.7 |
| Dividend | 2.4 | 1.7 | 0.7 | 2.3 |
| Value | 114.6 | 94.8 | 106.5 | --- |
- What would a price/cash ratio predict its value to be?
- What would a price/sales ratio predict?
- What would a price/dividend ratio predict?
- Do you observe any shortcomings of valuation by multiples above?
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Intermediate Accounting 2014 FASB Update
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
15th edition
978-1118938782, 111893878X, 978-1118985311, 1118985311, 978-1118562185, 1118562186, 978-1118147290
