Laura Martin: Case Study

3. Using the cash flow indicator and investment valuation ratios, discuss which company is more likely to have satisfied stockholders.

The questions that follow and the article Comparing the Accuracy and Explainability of Dividend, Free Cash Flow, and Abnormal Earnings Equity Value Estimates will inform your completion of Milestone Three. An understanding of the models in this assignment will assist you in hypothesizing the incremental impact of a new investment project for the company. The understanding of these models will contribute to your ability to look toward the future when considering the direction of an organization. This activity is worth a total of 75 points. See the distribution of points listed before each question.

The financial returns for the other three properties are shown in the following exhibit (Exhibit 6).

A vertical and horizontal analysis of each company's balance sheet and income statement in this particular case will be enlightening. A vertical analysis will for instance shed some light on how revenue is being used. In this case, each component of the companies' financial statements will be converted into a percentage of a key component of either the balance sheet or the income statement. A special common size balance sheet and income statement will be utilized to ease comparison. The

  As  for  this  case,  we  decided  to  address  the  companies  that  were     2   most  similar  in  size  to  MCC  and  that  were  most  recent  since  the  industry  is  rapidly   evolving,  and  therefore,  valuations  are  also  rapidly  changing.     Discounted  Cash  Flow  Analysis       Finally,

1. Please conduct a financial ratio analysis using the data in Exhibit 2. How do the results reflect different strategies pursued by the 4 firms?

{. How many consecutives years the company has been profitable, its current ration and its ROE

The following case analysis portraits the use of capital asset pricing model to compute the weighted average cost of capital for Marriott and each of its divisions. The flow of events below is following a string of different evaluations, each of which is assessed separately.

5. A complete analysis of the company’s financial statements for a minimum of the most recent three years of available data including a comparison of the company's ratios to most recent year’s peer company average ratios. Complete the ratio calculations yourself. Do not copy them from another source.

1. Which of the comparable companies appears to be a good match to Crocs at the time of the case? Which would be a good match in five years? Use these multiples to provide additional estimates of the value of Crocs (in other words, calculate a value for Crocs using a current multiple and calculate a

1. What ratios are MOST important in assessing current and predicting future value creation for Sears? For Wal-Mart?

The most important is Enterprise value/EBIDTA. Helps to estimate the offer of KKR, inc and gives the answer to Question N4. (See the following table)

Answer: EBIDTA figure inflates the earning of the firm, as it ignores “all the bad stuff” in its abbreviation. Furthermore, it is a pro forma figure which is very vulnerable to accounting manipulation. Martin’s target price was $50 and her projections for EBITDA were realized. According to her analysis Cox traded at 13.3X EBITDA, and Martin’ s target price would translate into a 20.9X.

3) Based on the data in Exhibit 7 and the definition of operating income gains given

Firms and Companies include ‘Ratios’ in their external report to which it can be referred as ‘highlights’. Only with the help of ratios the financial statements are meaningful. It is therefore, not surprising that ratio analysis feature are prominently in the literature on financial management. According to Mcleary (1992) ratio means “an expression of a relationship between any two figures or groups of figures in the financial statements of an undertaking”.