Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You will have to calculate different financial criteria for all 3 years. Book Value and BV Per Share Market Cap EBITDA Earnings Multiplier Per Share

You will have to calculate different financial criteria for all 3 years.
Book Value and BV Per Share
Market Cap
EBITDA
Earnings Multiplier Per Share/Total
Enterprise Value/EV Ratio
PV of Growing Perpetuity
Growth Rate
Discount Cash Flow
Venture Coast LLC is looking to acquire a new company. Below are the financials for a potential
candidate. Find out the following to determine if Venture Coast should invest. Revenue forecast is as
follows: Y1: $600,000; Y2: $625,000; Y3: $550,000.
1. Determine the company valuation for each of the next three years
a. Assume the net earnings, all assets, all liabilities and equity will grow at the same
average growth as sales.
b. The price per share is $1 and it is forecasted to stay the same
c. There are 500,000 outstanding shares
d. Venture Coast has a minimum requirement of 10% return on any investment they do
e. Venture Coast has a maximum budget of $1.6 million
Income Statement
For the year ending December 31,2017
Sales $500,000
Cost of goods sold 350,000
Gross profit 150,000
Operating expenses $75,000
Depreciation 20,000
EBIT 55,000
Interest expense 20,000
EBT 35,000
Tax Expense 12,250
EAT $22,750
Dividends 10,000
Retained earnings $12,750
Balance Sheet
December 31,2017
Cash $ 25,000 Short-term liabilities 60,000
Marketable securities 10,000 Mid-term liabilities 35,000
Accounts receivable 50,000 Long-term liabilities 140,000
Inventories 85,000 Common Equity 135,000
Plant, net 200,000___________________________
TOTAL ASSETS $370,000 Total L + E $370,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Okay lets calculate the different financial criteria for the next three years based on the given inf... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of Corporate Finance

Authors: Richard Brealey, Stewart Myers, Franklin Allen

13th edition

1260013901, 1260565553, 978-1260013900

More Books

Students also viewed these Finance questions

Question

Explain the process of Human Resource Planning.

Answered: 1 week ago