Midwest Lightening Inc. Case Essay

In order to evaluate company’s operational strength and weaknesses accurately it is important to have access to more than one year worth of data. The company, of course, will not be evaluated on the basis of couple of ratios, it is very important to analyze all the available information to put pieces of puzzle together to see the overall impression of the company and its attractiveness to creditors, investors and stockholders.

2. Business description and a brief history of the company. Does the company have any unique strategic positioning within the industry? – One paragraph 3. Present a qualitative assessment of the future outlook for the company. For example, are there any new products in the pipeline? Do you anticipate any competitive threats? Based on these developments, do you expect BBC’s growth and profitability to improve deteriorate, or stay about the same as in the past? 4. Revenue Forecasts and Free cash flow forecasts for the next ten years– • Specifically explain if you are forecasting revenue and FCF growths and profit margins that are significantly different from the company’s historical experience and why. 5. Present a DCF analysis and determine BBC’s intrinsic value. Assume that BBC’s Enterprise Value/ NOPLAT will be 18 ten years from now (check for sensitivities by assuming a multiple of either 15 or 20). 6. Present a valuation based on valuation ratios (P/B, P/E, P/S) for comparable firms. What price would you recommend based on these valuation ratios? Based on your recommended price, is BBC’s P/B ratio bigger or smaller than that of Redhook? Of Pete’s? Can you justify this difference? Do the same analysis for P/E and P/S ratios. (Note: Suppose a particular valuation ratio for one firm is 25 and you recommend a corresponding valuation multiple of

Additionally, we will look at the top managers making the strategic, long-term decisions. Finally, we will be researching their internal company strategies such as human resources, operations, marketing and finance. All of these play a role in determining the health of the company.

This report includes four sections which are company’s capital market analysis, business analysis, management quality and corporate governance analysis and earning quality. In order to have a clear view, the report use some peer competitors to compare with the company.

The factors looked at such as the profit margin, ROE, and ROA do paint the picture that the current state of the business is good. Revenues have increased on average 10% each year from 2002 to 2005. However during this time cash balances have decreased. Accounts receivable and inventory have increased in the same time span. Cash has decreased from $120.1 to $9.4, a decline of 92% over the four year time span. In the same period Accounts Receivable went from $90.6 in 2002 to $146.4 in 2005, an increase of 62%. Likewise, inventory has increased from $468.3 to $656.9, an increase of 40%. We do know that there are factors behind this increases and decreases, but has the change

Earnings: did the company show signs of increasing revenue each year, and can the company continue to increase revenue?

Review the company’s income statement, balance sheet, and cash flow to determine the financial health of the company. Be sure to compare your company to at least two other companies in the industry. Be sure to answer the following:

Clear Outcomes that comes when you weigh your option.. Most business owner first thought is to maximize their personal gains by sale, They usually want to ensure that their future generations can go forward in the business. They are also looking at who much capital and monthly income they will need to make life comfortable. Last are you ready to finance an new company and who much and how far are you willing to go.

• Understand some key measures of firm performance such as leverage, liquidity, efficiency, profitability, market value added and economic value added;

The framework for measuring fair value is easy to understand and follow, and relates to the conceptual framework. As stated earlier the preferred measure of fair value is the market approach, because the prices are observable. For this reason the standard recognizes the need for relevant, reliable, and comparable information in order for users to make better decisions about the current financial position of a company. Financial readers are aware of the valuing measurement used to calculate the fair value, whether the measurement were derived from an observable or unobservable input. The measurement establishes the existence of reliable and relevance qualitative factors that make accounting information useful for decision making (Barbera, 2007). If it were observable then the value derived can be researched and verified. However, if it were unobservable then the user must read the disclosures which will be discussed later in the research paper, and determine the reliability of the internally generated measurement. In return it can be understood that the level 1 inputs are more reliable and relevant than the other two levels.

Valuing organizations starts with the financial statements and moves through the current position of the firm into the future forecast of the firm’s position. The financial statements paint a picture of not only how the company is, but how they have performed over the last x-number of years. Factors to look at would be net income, cash and A/R, debt and A/P, current and past sales. These factors start by painting the picture of what has happened up to now within the organization and what they have on hand for future operations. Is net income (profitability) high or low? Is the firm laden with debt of a high accounts payable? Is the firm growing, retrenching, or remaining stable based on sales data. These are the first places that you as a valuator must look. Secondly, you must evaluate the future objectives of the firm. This will also be sourced from within the financial statements, more directly the Performa’s produced by the organization to detail projected revenues over the next number of x- periods. These Performa’s are going to be the crux of this valuation how to assessment.

the financial analysis of the company, we should also consider other factors such as the

Discuss the credit analysis process. [ Healy, P., & Palepu, K. (2012). Business analysis valuation: Using financial statements (5e ed.).

The valuation of a startup companies management team is a very important determination of the potential growth associated with a startup company. “Estimates of the company’s growth potential are often based on the valuator’s assessment of the competence of the management team and their ability to successfully exploit their opportunities” (Goldman 2008). A critical evaluation of the management team is a great place to start when valuing a company with little to no sales history.

The National Bank of Greece, Deutsche Bank, and YF Securities all provided different offers for the purchase of major or controlling interests in Finansbank Turkish operations, which they derived using different valuation methodologies. A comparison of these valuation methodologies, insofar as they can be ascertained from published literature and other sources, provides an understanding of the appropriateness and influence of different financial considerations on overall valuations as seen from varying perspectives. A comparison of the three methodologies employed by the three competing institutions is provided in the following paragraphs.