Analysis Of The Final Prospectus For Aritzia 's Ipo Essay

1159 WordsDec 11, 20165 Pages
On September 26th, the final prospectus emerged for Aritzia’s IPO. This IPO was highly anticipated with 25 million shares being sold at prices starting at $16/share. The closing date was October 3rd. The IPO did have much negative feedback from analysts and experts. a) Looking at Aritzia’s capital structure will allow analysts to identify an optimal value of the cost of capital of the company based on the percentage of debt and equity. As at May 29 2016, total debt was around $148 million dollars while total cash and cash equivalents totaled to around $10 million dollars. Total debt/ltm adjusted EBITDA was 1.58. This number is fairly low, so it is a good indicator of the financial health and Artizia’s ability to pay off the their debts. Looking at Aritzia’s statement of Financial Position ended August 28, 2016, the total liabilities was $349,189 while total shareholder’s equity was $424,718. Total assets equaled to $424,718. The capital structure is around 82% debt, 18% equity. b) Using the weighted average cost of capital valuation method, I determined the rWACC with the following numbers: - $1.818 billion for market value of equity - $143.8 million for market value of debt - 0.0799 for cost of equity - 0.0958 for cost of debt - income tax of 0.273 After, I then discounted the 2017 Fiscal Cash Flow with the rWACC. Market capitalization was found to be $1.82 billion. From the years of 2014 to 2016, there has also been a 49% growth in the Adjusted Net Income. The 2021

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