ch 03 the reporting entity and consolidated financial statements

This Comprehensive Problem is to acquaint you with the content of the 2012 financial statements

8) What would BV's 1988 earnings per share be after all of the above adjustments?

b.What are the amounts and timing of the acquisition investment’s free cash flow from 2013 through 2022?

11. Investors and creditors are particularly interested in this financial statement because it tells them what is happening to the company’s most important resource?

Andrea Winfield considered issuing bonds was not a good option for financing the acquisition. She was particularly concerned about the increasing long-term debt and annual cash layout of $ 6.25 million for 15 years. We believe that her concerns are justified, because the Company had already significant amount of debt that could result in higher risks and stock price

1. For the year-end December 31, 2007, financial statements, what amount should M record as a liability?

2. For the most recent year, what is the amount of inventory in the balance sheet? What does this amount represent?

Item 7.|  |MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS|  | |25|  |

ii. What percentage of the total (gross) assets acquired in the NDS acquisition (excluding liabilities assumed) are comprised of goodwill and other intangibles?

in our calculations, as this company exhibited dramatic value differences to others in the sample, (likely to skew our results and prove misleading). Using the average of the revised sample field for each ratio, we inserted Torrington’s values where appropriate to generate an entity value. The findings generated two values for Torrington, 606 million and 398 million. Taking the average of these two numbers, Torrington exhibited a relative value of 502.41 million. Because of the lack of related information given in the case, and the often large differences in measures amongst competitors, different capital structures, internal management strategies, there remained many unknowns in our model. We decided it would be best to use this valuation to reaffirm our assumptions in our DCF valuation. (Please see exhibits)

Thank you for taking the time to meet with us.During our meeting, you stated that you (Stephen) are planning to purchase your co-owner’s (Rob Wilco) shares of Wiki Art Gallery, Inc. (WAG). As a private company, WAG’s shares do not have a readily available market price. However, you and Rob have agreed on calculating the buy-out price using the “earning multiplier” equal to five times the GAAP based net income for the year ended September 30, 2011.You stated that you would like an opinion regarding the 2011 financial information as it has not been audited. You would like to know whether WAG’s fiscal 2011net income fairly reports

Market value proportions of: Debt = $1,147,200 / $4,897,200 = 23.4% Pref. Share = $1,250,000 / $4,897,200 = 25.5% Common equity = $2,500,000 / $4,897,200 = 51.1%

To arrive to the correct set of cash flows to use for the most basic valuation method (the WACC), Kennecott should take net income and add back tax adjusted interest expenses, depreciation and goodwill amortization, and subtract increases in net working capital and capital expenditures. Without adjusting the net income to obtain the free cash flows, the value of Carborundum to Kennecott could justified $70-$85 per share. Multiplying the per share price of $85 by the 8 million shares outstanding, Carborundum would be worth $680 million. This figures is identical to the cash flows calculated under Exhibit 7 of the case, discounted at a discount rate of 10%, which comes out to $679 million.

Exhibit 6, 8, and 9 (figures in $ millions) provides selected balance sheet items for Ford, General Motors, and DaimlerChrylser. The given information indicates that Ford carries the highest amount of cash and marketable securities among the three companies. In 1999, Ford had $25,173 of cash and marketable securities while General Motors and Daimler-Chrylser have only $12,140 and $9,163. Comparing at an industry level, we as a team

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