Acquisition of Consolidated Rail – Case Study 1. Background Info - Conrail 1.1. Formed from the remains of the six bankrupt North-eastern railroads in 1973 1.2. Earned its first profit in 1981- $39.2m on revenues of $4.2bn. Privatised through an IPO in 1987 1.3. Major player in North-eastern cities and their connection with major Mid-western hubs 1.4. In 1995‚ had 23‚510 employees‚ operated 10‚701 miles of track and controlled 29.4% of the eastern rail freight market 1.5. Financial indicators-
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focus on cash flows and not accounting profits when making capital-budgeting decisions. This is because free cash flows is received by the firm and then is able to be reinvested. Accounting profits are only shown once they have been earned instead of when the money is actually in hand (Kewon‚ Martin & Petty. 2011 p.303).taxes The company should be focused on total free cash flows because it can be reinvested immediately after being received. Depreciation is a non-cash flow expense which is
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the exit alternatives for this investment? Create a DCF Model for Toys R Us. Also‚ add an LBO analysis by including the debt payments on principal and interest to evaluate the firm’s ability to service a large amount of debt from its free cash flows. Make projections you feel are reasonable given the information provided‚ and provide sensitivity analysis to some of your key assumptions. What do you think is an appropriate discount rate for this
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Pontrelli Recycling Sara Doyle‚ Kevin Jackson‚ and Ali Lakhani FIN/575 Michael Plesko January 20‚ 2014 Pontrelli Recycling Pontrelli Recycling‚ Inc. has a mission to “increase the efficiency of recycling usable materials in order to create a better environment for all‚” and to “create value and a fair return on investment for shareholders” (Callahan‚ Stetz‚ and Brooks‚ 2007). A project must always be aligned with the company’s strategy and financial goals. When devising any new project‚ a
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their excess would impact the basic finances of Kmart. Other than the wasteful spending‚ since Conaway came to power Kmart underwent a new strategy that was focused on destroying the competition at any cost. In the beginning‚ this meant a dishonest price war with both Wal-Mart and Target. When
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the acquisition could save AirThread more than 20% in backhaul costs. The reasons above make us believe that the synergy is positive and the acquisition is a good idea. Based on the projected cash flow information provided in the case‚ what is the stand- alone value of AirThread? Show the cash flow forecasts‚ discount rate‚ and your valuation model. (Hint: pay attention to the Working Capital Assumptions provided in Ex 1. For example‚ Accounts Receivable 41.67× means on average it takes 41.67
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Create a pro forma cash flow budget for the organization for at least the next 5 years. Format your paper consistent with APA guidelines. Business - Finance Resource: The Guillermo Furniture Store Scenario Write a paper in 2‚100 words that analyzes Guillermo’s alternatives and make a recommendation of a financial decision. The paper must also include a justification for your recommendation. Create a pro forma cash flow budget for the organization for at
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examination of the Arch Communications Inc. case and the valuation done by the Analyst‚ we believe that there are following issues with valuation which should be examined very closely – 1) Technicality Error in the preparation of the Free Cash Flow: In the FCF prepared by John Adams: Tax and Change in Net Working Capital items cannot be observed. We may assume that‚ this was done on purpose since both of these values were accepted as “0” throughout the forecast period. * In the absence
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Stage Specification Stage 1. Be very clear on the effort involved and the dependencies before committing to deadlines - the financial modeling exercise is usually on the critical path! 2. Get the algebra right — make sure all revenues‚ cash flow inwards and assets are positive while expenses‚ cash outflows and liabilities are negative. This will ensure that we rarely use the minus sign in formulae and can use the sum() function. 3. Avoid all calculations that will cause circular references
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Mercury Athletic Footwear Ashutosh Dash Firm Value & Cash Flow Unlevered Free Cash Flow • FCF = EBIT (1-t) + DEP - ∆NWC - CAPEX Or • FCF = EBIT (1-t) - ∆NFA - ∆NWC • EBIT (1-t) or NOPAT is debt free income • Where do we pick up the interest tax shield? • Estimating FCF requires – Developing a reorganized Balance Sheet A Complex Reorganized Balance Sheet Assets Excess Cash NWC Liabilities 000 Debt 104117 Others 000 000 NFA (PPE) 32618 Hybrids Others 77332 Equity 214067 214067 Capital
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