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Required: Determine the valuation of the company at the end of 2019 using each of the following three methods. Assume earnings and cash flows for the coming 10 years are equal to the earnings and cash flows in 2019; the appropriate free cash flow multiple is 23.4. (Enter your answers in millions rounded to nearest whole number.) a. Market capitalization. b. Enterprise value. c. Free cash flow multiple.

Required: Determine the valuation of the company at the end of 2019 using each of the following three methods. Assume earnings and cash flows for the coming 10 years are equal to the earnings and cash flows in 2019; the appropriate free cash flow multiple is 23.4. (Enter your answers in millions rounded to nearest whole number.) a. Market capitalization. b. Enterprise value. c. Free cash flow multiple.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider the following balance sheet and income statement for Mmm Good Foods Incorporated (the company that operates Tasty Fried Chicken and Pizza Party), in condensed form, including some information from the cash flow statement: (amounts are in millions) Mmm Good Foods Incorporated 2019 Balance Sheet $ 722 388 54 462 Cash and short-term Investments Accounts receivable Inventory Other current assets 4,104 $5,730 $1,459 11,170 Long-lived assets Total assets Current liabilities Total liabilities Noncontrolling interest Shareholders' equity Total liabilities and equity (5,440) $5,730 Income Statement Sales $ 6,546 3,588 $2,958 $ 1,643 Cost of sales Gross margin Earnings before interest and taxes Interest 325 342 Taxes Income from discontinued operations 607 $1,583 $ 81 5.91 356.8 Net income Share price Earnings per share Number of outstanding shares (millions) Cash Flows Cash flow from operations Capital expenditures Dividends $ 1,222 404 784 Required: Determine the valuation of the company at the end of 2019 using each of the following three methods. Assume earnings and cash flows for the coming 10 years are equal to the earnings and cash flows in 2019; the appropriate free cash flow multiple is 23.4. (Enter your answers in millions rounded to nearest whole number.) a. Market capitalization. b. Enterprise value. c. Free cash flow multiple.
Transcribed Image Text:Consider the following balance sheet and income statement for Mmm Good Foods Incorporated (the company that operates Tasty Fried Chicken and Pizza Party), in condensed form, including some information from the cash flow statement: (amounts are in millions) Mmm Good Foods Incorporated 2019 Balance Sheet $ 722 388 54 462 Cash and short-term Investments Accounts receivable Inventory Other current assets 4,104 $5,730 $1,459 11,170 Long-lived assets Total assets Current liabilities Total liabilities Noncontrolling interest Shareholders' equity Total liabilities and equity (5,440) $5,730 Income Statement Sales $ 6,546 3,588 $2,958 $ 1,643 Cost of sales Gross margin Earnings before interest and taxes Interest 325 342 Taxes Income from discontinued operations 607 $1,583 $ 81 5.91 356.8 Net income Share price Earnings per share Number of outstanding shares (millions) Cash Flows Cash flow from operations Capital expenditures Dividends $ 1,222 404 784 Required: Determine the valuation of the company at the end of 2019 using each of the following three methods. Assume earnings and cash flows for the coming 10 years are equal to the earnings and cash flows in 2019; the appropriate free cash flow multiple is 23.4. (Enter your answers in millions rounded to nearest whole number.) a. Market capitalization. b. Enterprise value. c. Free cash flow multiple.
a. Market capitalization million b. Enterprise value million c. Free cash flow multiple million References Learning Objective: 20-04 Apply the different methods for business analysis and business valuation. Worksheet Difficulty: 2 Medium
Transcribed Image Text:a. Market capitalization million b. Enterprise value million c. Free cash flow multiple million References Learning Objective: 20-04 Apply the different methods for business analysis and business valuation. Worksheet Difficulty: 2 Medium
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