Exam 19: Valuation and Financial Modeling: a Case Study

Use the table for the question(s)below. Ideko Sales and Operating Cost Assumptions -Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2007?

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(Multiple Choice)

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Question 1

Correct Answer:

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What is the purpose of the sensitivity analysis?

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Question 2

Correct Answer:

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Any financial valuation is only as accurate as the estimates on which it is based.Before concluding our analysis,it is important to assess the uncertainty of our estimates and to determine their potential impact on the value of the deal.Once we have developed the spreadsheet model,it is straightforward to perform a sensitivity analysis to determine the impact of changes in different parameters on the deal's value.

Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

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(Multiple Choice)

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Question 3

Correct Answer:

Verified

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010 Pro Forma Balance Sheet for Ideko,2005-2010 -Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation enterprise value of Ideko in 2010 is closest to:

(Multiple Choice)

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Question 4

The unlevered beta for Luxottica is closest to:

(Multiple Choice)

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Question 5

Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation equity value of Ideko in 2010 is closest to:

(Multiple Choice)

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Question 6

Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2008?

(Multiple Choice)

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Question 7

The free cash flow to the firm in 2010 is closest to:

(Multiple Choice)

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Question 8

If Ideko's loans will have an interest rate of 6.8%,then the interest expense paid in 2009 is closest to:

(Multiple Choice)

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Question 9

With the proper changes it is believed that Ideko's credit policies will allow for an account receivables days of 60.The forecasted accounts receivable for Ideko in 2008 is closest to:

(Multiple Choice)

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Question 10

The free cash flow to equity in 2010 is closest to:

(Multiple Choice)

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Question 11

Use the tables for the question(s)below. Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation -Ideko's Accounts Receivable Days is closest to:

(Multiple Choice)

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Question 12

Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

(Multiple Choice)

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Question 13

Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2009?

(Multiple Choice)

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Question 14

Use the tables for the question(s)below. Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation The following are financial ratios for three comparable companies: -Based upon the average P/E ratio of the comparable firms,Ideko's target market value of equity is closest to:

(Multiple Choice)

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Question 15

Using the income statement above and the following information: Calculate Ideko's Free Cash Flow to the Firm and Free Cash Flow to Equity in 2007.

(Essay)

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Question 16

Using the income statement above and the following information: Calculate Ideko's Free Cash Flow to the Firm and Free Cash Flow to Equity in 2009.

(Essay)

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Question 17

Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation EV/Sales ratio of Ideko in 2010 is closest to:

(Multiple Choice)

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Question 18

If the risk-free rate of interest is 6% and the market risk premium has historically averaged 5%,then the cost of capital for Oakley is closest to:

(Multiple Choice)

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Question 19

Based upon the average EV/EBITDA ratio of the comparable firms,if Ideko holds $6.5 million of cash in excess of its working capital needs,then Ideko's target market value of equity is closest to:

(Multiple Choice)

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Question 20

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Exam 19: Valuation and Financial Modeling: a Case Study

Use the table for the question(s)below. Ideko Sales and Operating Cost Assumptions -Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2007?

What is the purpose of the sensitivity analysis?

Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010 Pro Forma Balance Sheet for Ideko,2005-2010 -Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation enterprise value of Ideko in 2010 is closest to:

The unlevered beta for Luxottica is closest to:

Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation equity value of Ideko in 2010 is closest to:

Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2008?

The free cash flow to the firm in 2010 is closest to:

If Ideko's loans will have an interest rate of 6.8%,then the interest expense paid in 2009 is closest to:

With the proper changes it is believed that Ideko's credit policies will allow for an account receivables days of 60.The forecasted accounts receivable for Ideko in 2008 is closest to:

The free cash flow to equity in 2010 is closest to:

Use the tables for the question(s)below. Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation -Ideko's Accounts Receivable Days is closest to:

Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2009?

Use the tables for the question(s)below. Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation The following are financial ratios for three comparable companies: -Based upon the average P/E ratio of the comparable firms,Ideko's target market value of equity is closest to:

Using the income statement above and the following information: Calculate Ideko's Free Cash Flow to the Firm and Free Cash Flow to Equity in 2007.

Using the income statement above and the following information: Calculate Ideko's Free Cash Flow to the Firm and Free Cash Flow to Equity in 2009.

Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation EV/Sales ratio of Ideko in 2010 is closest to:

If the risk-free rate of interest is 6% and the market risk premium has historically averaged 5%,then the cost of capital for Oakley is closest to:

Based upon the average EV/EBITDA ratio of the comparable firms,if Ideko holds $6.5 million of cash in excess of its working capital needs,then Ideko's target market value of equity is closest to:

The Corporation

Introduction to Financial Statement Analysis

Financial Decision Making and the Law of One Price

The Time Value of Money

Interest Rates

Valuing Bonds

Investment Decision Rules

Fundamentals of Capital Budgeting

Valuing Stocks

Capital Markets and the Pricing of Risk

Optimal Portfolio Choice and the Capital Asset Pricing Model

Estimating the Cost of Capital

Investor Behavior and Capital Market Efficiency

Capital Structure in a Perfect Market

Debt and Taxes

Financial Distress,managerial Incentives,and Information

Payout Policy

Capital Budgeting and Valuation With Leverage

Financial Options

Option Valuation

Real Options

Raising Equity Capital

Debt Financing

Leasing

Working Capital Management

Short-Term Financial Planning

Mergers and Acquisitions

Corporate Governance

Risk Management

International Corporate Finance

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