Valuation Ratios in the Restaurant Industry Case Study Rahul Tiwari 3060267 Q1 Drivers of P/E ratio and P/B ratio Future earnings growth Expected earnings growth which affects future ROE. The future earnings of a company are expected to be due to its future growth potential which may be predicted by numerous indicators including forecasted sales growth rate due to market share gains etc. Operational efficiency Such as metrics such as ROA which according to Duponts analysis is composed of Asset
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capture the risk of the cash flows.) (3) Present Value: Note: the company is expected to grow by 6% forever since 2003. (Source: Exhibit 8) (4) Calculations: Table1 & 2 (5) Conclusion: The 51% of equity value is ITL 68.401 billion‚ over the investment EUR 25.9 million (ITL 50.235 billion). So‚ this investment is recommended. 2. Valuation of TeamSystem S.P.A. using multiple-based valuation (P/B multiple) (1) Price-to-book Ratio: (2) Industry Profile: Middle Market
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ship’s operating performance has significantly declined‚ which has directly contributed to a decline in its overall fair value. In the current year (2010)‚ Smooth Sailing’s annual operating cash flows have declined by 30 percent to $1.0 million‚ and its annual operating cash flows are expected to continue to decline in the near term. Because of this decline in the cruise ship’s fair value and operating performance‚ Smooth Sailings’ management is evaluating the following possible options for proceeding
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less taxes at 36% After-tax income add back Building depreciation add back Equipment depreciation add back It & other equipment depreciation Subtotal plus NCW Savings Subtotal Cash Flow Terminal Value‚ at book value Hurdle rate Discount factor at 15% PV of Cash Flows Sum‚ PV of Cash Flows & Terminal Value (BV Less 3 Initial Investments: 1. Building 2. Capital equipment 3. IT & Other equipment NPV (=7‚199-3‚030-2‚643-336) IRR Calculation Cash Flows (note: 6.187 = investments plus eng fees) (where the
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mine $108‚000. Complete the partial balance sheet of Spain Company for these items. (List assets with smallest net book value first. Enter all amounts as positive amounts and subtract where necessary.) Question 5 | | Beka Company owns equipment that cost $50‚000 when purchased on January 1‚ 2008. It has been depreciated using the straight-line method based on estimated salvage value of $5‚000 and an estimated useful life of 5 years. Prepare Beka Company’s journal entries to record the sale of
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Chapter 2 America Online‚ Inc. Teaching Note Introduction The America Online (AOL) case is a comprehensive financial-statement analysis case. It enables students to do strategic analysis‚ accounting analysis‚ financial analysis a: and prospective analysis in a rich context. It can he used either as the first case in a course. on financial; statement analysis to set up the course framework or towards the end of the course as a comprehensive case. If it is used at the beginning‚ the instructor should
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Chapter 14 Depreciation Allowance (折舊免稅額) – Plant and Machinery 1. Learning Objectives 1.1 Identify assets which are plant or machinery. 1.2 Identify persons who can claim depreciation allowance. 1.3 Identify the type of expenditure that qualifies for the depreciation allowance. 1.4 Compute depreciation allowance under the pooling system. 1.5 Compute depreciation allowance under the non-pooling system. 1.6 Calculate the balancing adjustment that arises when an asset is disposed of. 1.7 Identify
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information on purchase prices of any of the businesses fixed assets and this is where the term “historical cost” comes from. Due to the constant change in market values these costs can bear no relationship to the present day value of the assets‚ although businesses usually give more information. Fixed Assets | Cost | Accumulated Depreciation | Book Value | | £ | £ | £ | Premises | 100‚000 | | 100‚000 | Machines | 50‚000 | 20‚000 | 30‚000 | Computers | 30‚000 | 10‚000 | 20‚000 |The prudence concept
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company’s success. These problems are indicated in the quote that opens the case. Issues with the New Incentive Plan 1) the plan excludes all employees except the store‚ regional‚ and corporate managers. Clearly the lower-level employees create value for the company‚ but the consulting firm decided to exclude them with the reasoning that Ferreterías could not measure effectively the performances of these individuals. Undoubtedly some things could have been done. For example‚ sales people could
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buildings $1‚100‚000; accumulated depreciation-buildings $650‚000; goodwill $410‚000; coal mine $500‚000; accumulated depletion-coal mine $108‚000. Complete the partial balance sheet of Spain Company for these items. (List assets with smallest net book value first. Enter all amounts as positive amounts and subtract where necessary.) 3. Exercise Do It! 9. Match the statement with the term most directly associated with it. 4. Exercise E9-9. Presented below are selected transactions at
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