EBK CORPORATE FINANCE
4th Edition
ISBN: 9780134202785
Author: DeMarzo
Publisher: VST
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Chapter 9, Problem 27P
In addition to footwear, Kenneth Cole Productions designs and sells handbags, apparel, and other accessories. You decide, therefore, to consider comparables for KCP outside the footwear industry.
- a. Suppose that Fossil, Inc., has an enterprise value to EBITDA multiple of 9.73 and a PIE multiple of 18.4. What share price would you estimate for KCP using each of these multiples, based on the data for KCP in Problems 25 and 26?
- b. Suppose that Tommy Hilfiger Corporation has an enterprise value to EBITDA multiple of 7.19 and a PIE multiple of 17.2. What share price would you estimate for KCP using each of these multiples, based on the data for KCP In Problems 25 and 26?
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Compare and contrast the decisions that are consistent with the firm’s share price maximization goals. In your response, provide at least two peer-reviewed sources to support your answers. As we have discussed, one of the main goals of the organization is to maximize the profits in the organization to increase the firm’s share price. Consider your own organization or a previous organization, what goals were set to maximize the profits? Did these goals come at the “cost” of other important goals for the organization? Discuss your experiences.
Suppose you, a stock analyst, are performing a ratio analysis and comparing a discount merchandiser with a high-end merchandiser. Suppose further that both companies have identical ROEs. If you apply the DuPont equation to both firms, would you expect the three components to be the same for both companies? If not, explain what balance sheet and income statement items might lead to the differences in the DuPont equation components.
Chapter 9 Solutions
EBK CORPORATE FINANCE
Ch. 9.1 - How do you calculate the total return of a stock?Ch. 9.1 - Prob. 2CCCh. 9.2 - In what three ways can a firm increase its future...Ch. 9.2 - Under what circumstances can a firm increase its...Ch. 9.3 - How does the growth rate used in the total payout...Ch. 9.3 - Prob. 2CCCh. 9.3 - Prob. 3CCCh. 9.4 - Prob. 1CCCh. 9.4 - What implicit assumptions are made when valuing a...Ch. 9.5 - State the efficient market hypothesis.
Ch. 9.5 - Prob. 2CCCh. 9 - Assume Evco, Inc., has a current price of 50 and...Ch. 9 - Anle corporation has a current price of 20, is...Ch. 9 - Suppose Acap Corporation will pay a dividend of...Ch. 9 - Prob. 4PCh. 9 - NoGrowth Corporation currently pays a dividend of...Ch. 9 - Summit Systems will pay a dividend of 1.50 this...Ch. 9 - Prob. 7PCh. 9 - Canadian-based mining company EI Dorado Gold (EGO)...Ch. 9 - In 2006 and 2007, Kenneth Cole Productions (KCP)...Ch. 9 - DFB, Inc., expects earnings at the end of this...Ch. 9 - Cooperton Mining just announced it will cut its...Ch. 9 - Procter and Gamble (PG) paid an annual dividend of...Ch. 9 - Colgate-Palmolive Company has just paid an annual...Ch. 9 - Prob. 14PCh. 9 - Halliford Corporation expects to have earnings...Ch. 9 - Prob. 16PCh. 9 - Maynard Steel plans to pay a dividend of 3 this...Ch. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Suppose that In January 2006, Kenneth Cole...Ch. 9 - In addition to footwear, Kenneth Cole Productions...Ch. 9 - You read in the paper that Summit Systems from...Ch. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33P
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