GEN COMBO COLLEGE ACCOUNTING; CONNECT ACCESS CARD
GEN COMBO COLLEGE ACCOUNTING; CONNECT ACCESS CARD
4th Edition
ISBN: 9781260087376
Author: M. David Haddock Jr. Professor
Publisher: McGraw-Hill Education
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Chapter 3, Problem 2.6SRA
To determine

Find out the errors in the trial balance.

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You are a financial analyst at Beta Ltd., a company that is considering acquiring Alpha Ltd. You have been tasked to perform a discounted cash flow (DCF) valuation analysis in Excel to determine the value of the target company and advise on whether the acquisition would be financially beneficial.   The following information is provided:                             1.  Alpha Ltd. revenues were Sh.12.5 million. This revenue is expected to grow at a constant annual growth rate of 7.5% over the next 5 years.   2.  Alpha’s Ltd. gross profit margin is 75%.           3.  The target company currently has Sh.8 million in debt and Sh. 3 million in equity.    4. Selling general, administration and other expenses is expected to be 45% of sales.   5. Depreciation is expected to be 2.5% of sales.   6.  Net capital expenditures are expected to be 2.5% of net revenue annually.     7. Changes in net working capital are expected to amount to Sh.500,000, Sh.600,000, Sh.700,000,…
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