Z-Model Compute Z-scores for 2 yrs X-1 Working Capital / Total Assets Z score > WGHT 1.2 2020 2019 X-1 > 1.4 X-2 Retained Earns / Total Assets Ret. Earns Tot Assets X-2 > 3.3 X-3 EBIT / Total Assets EBIT Tot Assets X-3 > 107 0.6 COMPUTE THE Z-MODEL SCORE using data below millions of US Dollars INCOME STATEMENT 2020 2019 2018 Sales / Revenue (Net) 4,113 3,543 3,509 Cost of Goods Sold 3,012 2,605 2,574 Gross Profit (Loss) 1,100 938 935 Selling, General and Administrative Exp 847 768 767 Operating Inc Before Depreciation 253 170 168 Depreciation &Amortization - Total 90 85 84 Operating Income, EBIT 163 85 84 Interest (Exps or credit) - Net 1 4 -2 Pret-Tax Income & Other 164 89 82 Income Taxes Expense (Credit) 45 21 19 Income Before Extraordinary Items 119 68 63 NET INCOME (LOSS) 119 68 63 millions of US Dollars Current Assets 2020 2019 2019 Cash and Short-Term Investments - To 271 149 Receivables - Total 57 56 57 Inventories - Total 269 280 281 Current Assets - Other - Total 29 23 24 Current Assets Total 626 508 469 Property Plant & Equipment - Total (N 1,124 1,097 Intangible Assets - Total 70 70 75 Non-Current Assets Total 1,194 1,167 963 ASSETS TOTAL 1,820 1,676 1,432 millions of US Dollars Current Liabilities 2020 2019 2019 Debt in Current Liabilities 39 39 0 Account Payable/Creditors - Trade 222 181 191 Current Liabilities - Other 85 72 76 Current Liabilities Total 346 292 267 Long-Term Debt Total 169 180 0 Deferred Taxes and Investment Tax Cre 103 97 91 Liabilities (Other) 56 48 51 Long-Term Liabilities Total 328 325 142 Liabilities Total 674 617 409 Common Stock issued 516 477 460 Retained Earnings 630 582 563 Shareholders' Equity TOTAL 1,146 1,059 1,023 LIABILITIES & SHAREHOLDER EQUITY 1 1,820 1,676 1,432 X-4 Market Val. Stock /Tot Liabilities Stock Price Stk Shares mill. Market Capitalization Tot. Liabilities $ 50.00 $ 38.00 29.5 29.0 888 X-4 > 1.0 X-5 Net Sales / Total Assets Revenue Tot Assets X-5 > 2020 2019 Calculate Free Cash Flow for 2 Yrs USE 25% INC.TAX RATE EBIT EBITX (1 - 25 tax rate) Free Cash Flow P/BK VALUE BY INDUSTRY COMPARABLES (MULTIPLES) NAME Firm A-B-C-D are Industry Peer firms Use "Comparables" method to estimate firm X's stock price. Enter correct values in 'boxed' areas. $000 Sales Earnings Book Value Market Cap Value P/S P/E Firm A 129,000 14,000 115,000 140,000 Firm B 148,000 9,500 105,000 180,000 Firm C 95,000 9,000 80,000 118,000 Firm D 109,000 9,700 92,000 122,000 Firm X > $ 81,000 $ 7,600 $ 59,000 COMM SHARES > 1,400 Firm X Estimated stock value ---- #3 Use Data provided to estimate the value of Firm ABC based on relative P/E ratio S&P500 PE Multiples Valuation Estimate PE-annual PE-annual S&P500 Firm 'ABC 2020 22.1 17.8 2019 23.8 19.4 2018 20.9 16.5 2017 18.6 13.7 S&P500 Firm 'ABC Relative P/E Step-1 AVG PE +/- 10% range 21.35 2.135 S&P500 PE Firm 'ABC' Est'd PE 23.40 Step-2 FORECAST 2021 Baseline OPTIM (+ 10%) PESSIM (-10%) Firm 'ABC EPS Forecast Firm 'ABC' Est'd Stock Value Step-3_2021 Baseline | $ 4.10 $ WGHT 1.2 2020 2019 X-1 > 1.4 X-2 Retained Earns / Total Assets Ret. Earns Tot Assets X-2 > 3.3 X-3 EBIT / Total Assets EBIT Tot Assets X-3 > 107 0.6 COMPUTE THE Z-MODEL SCORE using data below millions of US Dollars INCOME STATEMENT 2020 2019 2018 Sales / Revenue (Net) 4,113 3,543 3,509 Cost of Goods Sold 3,012 2,605 2,574 Gross Profit (Loss) 1,100 938 935 Selling, General and Administrative Exp 847 768 767 Operating Inc Before Depreciation 253 170 168 Depreciation &Amortization - Total 90 85 84 Operating Income, EBIT 163 85 84 Interest (Exps or credit) - Net 1 4 -2 Pret-Tax Income & Other 164 89 82 Income Taxes Expense (Credit) 45 21 19 Income Before Extraordinary Items 119 68 63 NET INCOME (LOSS) 119 68 63 millions of US Dollars Current Assets 2020 2019 2019 Cash and Short-Term Investments - To 271 149 Receivables - Total 57 56 57 Inventories - Total 269 280 281 Current Assets - Other - Total 29 23 24 Current Assets Total 626 508 469 Property Plant & Equipment - Total (N 1,124 1,097 Intangible Assets - Total 70 70 75 Non-Current Assets Total 1,194 1,167 963 ASSETS TOTAL 1,820 1,676 1,432 millions of US Dollars Current Liabilities 2020 2019 2019 Debt in Current Liabilities 39 39 0 Account Payable/Creditors - Trade 222 181 191 Current Liabilities - Other 85 72 76 Current Liabilities Total 346 292 267 Long-Term Debt Total 169 180 0 Deferred Taxes and Investment Tax Cre 103 97 91 Liabilities (Other) 56 48 51 Long-Term Liabilities Total 328 325 142 Liabilities Total 674 617 409 Common Stock issued 516 477 460 Retained Earnings 630 582 563 Shareholders' Equity TOTAL 1,146 1,059 1,023 LIABILITIES & SHAREHOLDER EQUITY 1 1,820 1,676 1,432 X-4 Market Val. Stock /Tot Liabilities Stock Price Stk Shares mill. Market Capitalization Tot. Liabilities $ 50.00 $ 38.00 29.5 29.0 888 X-4 > 1.0 X-5 Net Sales / Total Assets Revenue Tot Assets X-5 > 2020 2019 Calculate Free Cash Flow for 2 Yrs USE 25% INC.TAX RATE EBIT EBITX (1 - 25 tax rate) Free Cash Flow P/BK VALUE BY INDUSTRY COMPARABLES (MULTIPLES) NAME Firm A-B-C-D are Industry Peer firms Use "Comparables" method to estimate firm X's stock price. Enter correct values in 'boxed' areas. $000 Sales Earnings Book Value Market Cap Value P/S P/E Firm A 129,000 14,000 115,000 140,000 Firm B 148,000 9,500 105,000 180,000 Firm C 95,000 9,000 80,000 118,000 Firm D 109,000 9,700 92,000 122,000 Firm X > $ 81,000 $ 7,600 $ 59,000 COMM SHARES > 1,400 Firm X Estimated stock value ---- #3 Use Data provided to estimate the value of Firm ABC based on relative P/E ratio S&P500 PE Multiples Valuation Estimate PE-annual PE-annual S&P500 Firm 'ABC 2020 22.1 17.8 2019 23.8 19.4 2018 20.9 16.5 2017 18.6 13.7 S&P500 Firm 'ABC Relative P/E Step-1 AVG PE +/- 10% range 21.35 2.135 S&P500 PE Firm 'ABC' Est'd PE 23.40 Step-2 FORECAST 2021 Baseline OPTIM (+ 10%) PESSIM (-10%) Firm 'ABC EPS Forecast Firm 'ABC' Est'd Stock Value Step-3_2021 Baseline | $ 4.10 $