Exam 19: Valuation and Financial Modeling: a Case Study

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:

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

What range for the market value of equity for Ideko is implied by the range of EV/EBITDA multiples for the comparable firms if Ideko holds $6.5 million of cash in excess of its working capital needs?

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(Essay)

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Question 2

Correct Answer:

Verified

Low EV/EBITDA (Nike)= 9.3
Low EV = EBITDA × EV/EBITDA = $16.25 million × 9.3 = $151.13 million
Low EV = Equity + Debt - Cash in excess of NWC needs
Low Equity Price = EV - Debt + cash in excess of NWC needs = $151.13 - $4.5 + $6.5 = $153.13 million
High EV/EBITDA (Luxottica)= 14.4
High EV = EBITDA × EV/EBITDA = $16.25 million × 14.4 = $234.00 million
High EV = Equity + Debt - Cash in excess of NWC needs
High Equity Price = EV - Debt + cash in excess of NWC needs = $234.00 - $4.5 + $6.5 = $236.00 million

Use the following information to answer the question(s) below: Ideko's Planned Debt -If Ideko's loans will have an interest rate of 6.8%,then the interest expense paid in 2009 is closest to:

Free

(Multiple Choice)

4.8/5

(34)

Question 3

Correct Answer:

Verified

Use the following information to answer the question(s) below: -If Ideko's future expected growth rate is 5% and its WACC is 9%,then the continuation value in 2010 is closest to:

(Multiple Choice)

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Question 4

What range for the market value of equity for Ideko is implied by the range of P/E multiples for the comparable firms?

(Essay)

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Question 5

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 6

Use the table for the question(s) below. Pro Forma Income Statement for Ideko, 2005-2010 -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 7

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 9.4,then the continuation EV/Sales ratio of Ideko in 2010 is closest to:

(Multiple Choice)

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Question 8

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 9

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 EV/Sales ratio of Ideko in 2010 is closest to:

(Multiple Choice)

4.8/5

(42)

Question 10

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

(Multiple Choice)

4.8/5

(45)

Question 11

Use the following information to answer the question(s) below: -The free cash flow to the firm in 2010 is closest to:

(Multiple Choice)

4.8/5

(38)

Question 12

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 EV/Sales ratio of the comparable firms,Ideko's target economic value is closest to:

(Multiple Choice)

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(36)

Question 13

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 9.4,then the continuation equity value of Ideko in 2010 is closest to:

(Multiple Choice)

4.8/5

(38)

Question 14

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 2008?

(Multiple Choice)

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(34)

Question 15

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

(Multiple Choice)

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(32)

Question 16

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?

(Multiple Choice)

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(42)

Question 17

Use the following information to answer the question(s) below: -The after tax interest expense in 2008 is closest to:

(Multiple Choice)

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(31)

Question 18

The amount of net working capital for Ideko in 2007 is closest to:

(Multiple Choice)

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Question 19

The amount of the increase in net working capital for Ideko in 2007 is closest to:

(Multiple Choice)

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Question 20

Showing 1 - 20 of 49

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:

What range for the market value of equity for Ideko is implied by the range of EV/EBITDA multiples for the comparable firms if Ideko holds $6.5 million of cash in excess of its working capital needs?

Use the following information to answer the question(s) below: Ideko's Planned Debt -If Ideko's loans will have an interest rate of 6.8%,then the interest expense paid in 2009 is closest to:

Use the following information to answer the question(s) below: -If Ideko's future expected growth rate is 5% and its WACC is 9%,then the continuation value in 2010 is closest to:

What range for the market value of equity for Ideko is implied by the range of P/E multiples for the comparable firms?

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.

Use the table for the question(s) below. Pro Forma Income Statement for Ideko, 2005-2010 -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:

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 9.4,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:

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 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 Luxottica is closest to:

Use the following information to answer the question(s) below: -The free cash flow to the firm in 2010 is closest to:

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 EV/Sales ratio of the comparable firms,Ideko's target economic value 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 9.4,then the continuation equity value of Ideko in 2010 is closest to:

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 2008?

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

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?

Use the following information to answer the question(s) below: -The after tax interest expense in 2008 is closest to:

The amount of net working capital for Ideko in 2007 is closest to:

The amount of the increase in net working capital for Ideko in 2007 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

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