Deck 19: Valuation and Financial Modeling: a Case Study

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Question
Use the following information to answer the question(s)below:
Ideko's Planned Debt
<strong>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 2008 is closest to:</strong> A)$6800 B)$7310 C)$7820 D)$7990 <div style=padding-top: 35px>
If Ideko's loans will have an interest rate of 6.8%,then the interest expense paid in 2008 is closest to:

A)$6800
B)$7310
C)$7820
D)$7990
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Question
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?
Question
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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:</strong> A)84 days B)95 days C)90 days D)75 days <div style=padding-top: 35px>
Ideko's Accounts Receivable Days is closest to:

A)84 days
B)95 days
C)90 days
D)75 days
Question
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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/EBITDA ratio of the comparable firms,Ideko's target economic value is closest to:</strong> A)$191 million B)$155 million C)$157 million D)$193 million <div style=padding-top: 35px> The following are financial ratios for three comparable companies:
<strong>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/EBITDA ratio of the comparable firms,Ideko's target economic value is closest to:</strong> A)$191 million B)$155 million C)$157 million D)$193 million <div style=padding-top: 35px>
Based upon the average EV/EBITDA ratio of the comparable firms,Ideko's target economic value is closest to:

A)$191 million
B)$155 million
C)$157 million
D)$193 million
Question
Use the following information to answer the question(s)below:
Ideko's Planned Debt
<strong>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:</strong> A)$6800 B)$7310 C)$7820 D)$7990 <div style=padding-top: 35px>
If Ideko's loans will have an interest rate of 6.8%,then the interest expense paid in 2009 is closest to:

A)$6800
B)$7310
C)$7820
D)$7990
Question
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The free cash flow to the firm in 2010 is closest to:</strong> A)10,684 B)11,559 C)23,698 D)26,394 <div style=padding-top: 35px> <strong>Use the following information to answer the question(s)below:     The free cash flow to the firm in 2010 is closest to:</strong> A)10,684 B)11,559 C)23,698 D)26,394 <div style=padding-top: 35px>
The free cash flow to the firm in 2010 is closest to:

A)10,684
B)11,559
C)23,698
D)26,394
Question
What range for the market value of equity for Ideko is implied by the range of P/E multiples for the comparable firms?
Question
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The after tax interest expense in 2008 is closest to:</strong> A)2380 B)4420 C)6800 D)7820 <div style=padding-top: 35px> <strong>Use the following information to answer the question(s)below:     The after tax interest expense in 2008 is closest to:</strong> A)2380 B)4420 C)6800 D)7820 <div style=padding-top: 35px>
The after tax interest expense in 2008 is closest to:

A)2380
B)4420
C)6800
D)7820
Question
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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,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:</strong> A)$165 million B)$157 million C)$193 million D)$191 million <div style=padding-top: 35px> The following are financial ratios for three comparable companies:
<strong>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,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:</strong> A)$165 million B)$157 million C)$193 million D)$191 million <div style=padding-top: 35px>
Based upon the average EV/Sales 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:

A)$165 million
B)$157 million
C)$193 million
D)$191 million
Question
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The free cash flow to equity in 2008 is closest to:</strong> A)-5005 B)-1755 C)5575 D)9995 <div style=padding-top: 35px> <strong>Use the following information to answer the question(s)below:     The free cash flow to equity in 2008 is closest to:</strong> A)-5005 B)-1755 C)5575 D)9995 <div style=padding-top: 35px>
The free cash flow to equity in 2008 is closest to:

A)-5005
B)-1755
C)5575
D)9995
Question
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The after tax interest expense in 2010 is closest to:</strong> A)0 B)2856 C)5304 D)8160 <div style=padding-top: 35px> <strong>Use the following information to answer the question(s)below:     The after tax interest expense in 2010 is closest to:</strong> A)0 B)2856 C)5304 D)8160 <div style=padding-top: 35px>
The after tax interest expense in 2010 is closest to:

A)0
B)2856
C)5304
D)8160
Question
Use the table for the question(s)below.
Ideko Sales and Operating Cost Assumptions
<strong>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?</strong> A)1702 units B)1323 units C)1505 units D)1914 units <div style=padding-top: 35px>
Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2008?

A)1702 units
B)1323 units
C)1505 units
D)1914 units
Question
What range for the market value of equity for Ideko is implied by the range of EV/Sales multiples for the comparable firms if Ideko holds $6.5 million of cash in excess of its working capital needs?
Question
Use the table for the question(s)below.
Ideko Sales and Operating Cost Assumptions
<strong>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?</strong> A)1505 units B)1323 units C)1914 units D)1115 units <div style=padding-top: 35px>
Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2007?

A)1505 units
B)1323 units
C)1914 units
D)1115 units
Question
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The free cash flow to equity in 2010 is closest to:</strong> A)6255 B)10,684 C)11,559 D)18,394 <div style=padding-top: 35px> <strong>Use the following information to answer the question(s)below:     The free cash flow to equity in 2010 is closest to:</strong> A)6255 B)10,684 C)11,559 D)18,394 <div style=padding-top: 35px>
The free cash flow to equity in 2010 is closest to:

A)6255
B)10,684
C)11,559
D)18,394
Question
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The free cash flow to the firm in 2008 is closest to:</strong> A)-5005 B)-1755 C)5575 D)14,995 <div style=padding-top: 35px> <strong>Use the following information to answer the question(s)below:     The free cash flow to the firm in 2008 is closest to:</strong> A)-5005 B)-1755 C)5575 D)14,995 <div style=padding-top: 35px>
The free cash flow to the firm in 2008 is closest to:

A)-5005
B)-1755
C)5575
D)14,995
Question
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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:</strong> A)$157 million B)$155 million C)$193 million D)$165 million <div style=padding-top: 35px> The following are financial ratios for three comparable companies:
<strong>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:</strong> A)$157 million B)$155 million C)$193 million D)$165 million <div style=padding-top: 35px>
Based upon the average P/E ratio of the comparable firms,Ideko's target market value of equity is closest to:

A)$157 million
B)$155 million
C)$193 million
D)$165 million
Question
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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:</strong> A)$191 million B)$155 million C)$165 million D)$157 million <div style=padding-top: 35px> The following are financial ratios for three comparable companies:
<strong>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:</strong> A)$191 million B)$155 million C)$165 million D)$157 million <div style=padding-top: 35px>
Based upon the average EV/Sales ratio of the comparable firms,Ideko's target economic value is closest to:

A)$191 million
B)$155 million
C)$165 million
D)$157 million
Question
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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/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:</strong> A)$155 million B)$157 million C)$165 million D)$193 million <div style=padding-top: 35px> The following are financial ratios for three comparable companies:
<strong>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/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:</strong> A)$155 million B)$157 million C)$165 million D)$193 million <div style=padding-top: 35px>
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:

A)$155 million
B)$157 million
C)$165 million
D)$193 million
Question
Use the table for the question(s)below.
Ideko Sales and Operating Cost Assumptions
<strong>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 2009?</strong> A)1505 units B)1115 units C)1323 units D)1702 units <div style=padding-top: 35px>
Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2009?

A)1505 units
B)1115 units
C)1323 units
D)1702 units
Question
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of net working capital for Ideko in 2008 is closest to:</strong> A)$35,195 B)$26,420 C)$22,170 D)$30,510 <div style=padding-top: 35px>
The amount of net working capital for Ideko in 2008 is closest to:

A)$35,195
B)$26,420
C)$22,170
D)$30,510
Question
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   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:</strong> A)14.7% B)10.2% C)9.1% D)13.5% <div style=padding-top: 35px>
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:

A)14.7%
B)10.2%
C)9.1%
D)13.5%
Question
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   The unlevered beta for Luxottica is closest to:</strong> A)1.00 B)0.60 C)0.70 D)1.50 <div style=padding-top: 35px>
The unlevered beta for Luxottica is closest to:

A)1.00
B)0.60
C)0.70
D)1.50
Question
Use the following information to answer the question(s)below: <strong>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:</strong> A)164,200 B)278,775 C)280,450 D)303,425 <div style=padding-top: 35px> <strong>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:</strong> A)164,200 B)278,775 C)280,450 D)303,425 <div style=padding-top: 35px>
If Ideko's future expected growth rate is 5% and its WACC is 9%,then the continuation value in 2010 is closest to:

A)164,200
B)278,775
C)280,450
D)303,425
Question
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   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:</strong> A)13.5% B)10.2% C)9.1% D)14.7% <div style=padding-top: 35px>
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:

A)13.5%
B)10.2%
C)9.1%
D)14.7%
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)$152.8 million B)$272.8 million C)$301.7 million D)$181.7 million <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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:</strong> A)$152.8 million B)$272.8 million C)$301.7 million D)$181.7 million <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation enterprise value of Ideko in 2010 is closest to:

A)$152.8 million
B)$272.8 million
C)$301.7 million
D)$181.7 million
Question
Using the income statement above and the following information:
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.<div style=padding-top: 35px>
Calculate Ideko's Free Cash Flow to the Firm and Free Cash Flow to Equity in 2009.
Question
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of the increase in net working capital for Ideko in 2008 is closest to:</strong> A)$4685 B)$3665 C)$4090 D)$5230 <div style=padding-top: 35px>
The amount of the increase in net working capital for Ideko in 2008 is closest to:

A)$4685
B)$3665
C)$4090
D)$5230
Question
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 2007 is closest to:</strong> A)$14,525 B)$16,970 C)$22,710 D)$19,690 <div style=padding-top: 35px>
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 2007 is closest to:

A)$14,525
B)$16,970
C)$22,710
D)$19,690
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 equity value of Ideko in 2010 is closest to:</strong> A)$181.7 million B)$272.8 million C)$152.8 million D)$301.7 million <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 equity value of Ideko in 2010 is closest to:</strong> A)$181.7 million B)$272.8 million C)$152.8 million D)$301.7 million <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation equity value of Ideko in 2010 is closest to:

A)$181.7 million
B)$272.8 million
C)$152.8 million
D)$301.7 million
Question
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 2006 is closest to:</strong> A)$19,690 B)$16,970 C)$22,710 D)$14,525 <div style=padding-top: 35px>
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 2006 is closest to:

A)$19,690
B)$16,970
C)$22,710
D)$14,525
Question
Using the income statement above and the following information:
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.<div style=padding-top: 35px>
Calculate Ideko's Free Cash Flow to the Firm and Free Cash Flow to Equity in 2007.
Question
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of net working capital for Ideko in 2007 is closest to:</strong> A)$30,510 B)$26,420 C)$22,170 D)$35,195 <div style=padding-top: 35px>
The amount of net working capital for Ideko in 2007 is closest to:

A)$30,510
B)$26,420
C)$22,170
D)$35,195
Question
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   The unlevered beta for Nike is closest to:</strong> A)0.70 B)1.00 C)1.50 D)0.60 <div style=padding-top: 35px>
The unlevered beta for Nike is closest to:

A)0.70
B)1.00
C)1.50
D)0.60
Question
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of the increase in net working capital for Ideko in 2007 is closest to:</strong> A)$4090 B)$4685 C)$3665 D)$5230 <div style=padding-top: 35px>
The amount of the increase in net working capital for Ideko in 2007 is closest to:

A)$4090
B)$4685
C)$3665
D)$5230
Question
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of net working capital for Ideko in 2006 is closest to:</strong> A)$22,750 B)$35,195 C)$30,510 D)$26,420 <div style=padding-top: 35px>
The amount of net working capital for Ideko in 2006 is closest to:

A)$22,750
B)$35,195
C)$30,510
D)$26,420
Question
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   The unlevered beta for Oakley is closest to:</strong> A)0.70 B)1.50 C)1.00 D)0.60 <div style=padding-top: 35px>
The unlevered beta for Oakley is closest to:

A)0.70
B)1.50
C)1.00
D)0.60
Question
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   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:</strong> A)10.2% B)13.5% C)9.1% D)14.7% <div style=padding-top: 35px>
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:

A)10.2%
B)13.5%
C)9.1%
D)14.7%
Question
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)$14,525 B)$19,690 C)$22,710 D)$16,970 <div style=padding-top: 35px>
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:

A)$14,525
B)$19,690
C)$22,710
D)$16,970
Question
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     If Ideko's future expected growth rate is 5%,then the estimated free cash flow for 2011 is closest to:</strong> A)6568 B)11,151 C)11,218 D)12,137 <div style=padding-top: 35px> <strong>Use the following information to answer the question(s)below:     If Ideko's future expected growth rate is 5%,then the estimated free cash flow for 2011 is closest to:</strong> A)6568 B)11,151 C)11,218 D)12,137 <div style=padding-top: 35px>
If Ideko's future expected growth rate is 5%,then the estimated free cash flow for 2011 is closest to:

A)6568
B)11,151
C)11,218
D)12,137
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 enterprise value of Ideko in 2010 is closest to:</strong> A)$181.7 million B)$152.8 million C)$272.8 million D)$301.7 million <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 enterprise value of Ideko in 2010 is closest to:</strong> A)$181.7 million B)$152.8 million C)$272.8 million D)$301.7 million <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation enterprise value of Ideko in 2010 is closest to:

A)$181.7 million
B)$152.8 million
C)$272.8 million
D)$301.7 million
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 levered P/E ratio of Ideko in 2010 is closest to:</strong> A)19.0 B)17.2 C)16.4 D)14.5 <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 levered P/E ratio of Ideko in 2010 is closest to:</strong> A)19.0 B)17.2 C)16.4 D)14.5 <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation levered P/E ratio of Ideko in 2010 is closest to:

A)19.0
B)17.2
C)16.4
D)14.5
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 levered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.2 B)14.5 C)19.0 D)16.4 <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 levered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.2 B)14.5 C)19.0 D)16.4 <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation levered P/E ratio of Ideko in 2010 is closest to:

A)17.2
B)14.5
C)19.0
D)16.4
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 unlevered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.2 B)16.4 C)14.5 D)19.4 <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 unlevered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.2 B)16.4 C)14.5 D)19.4 <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

A)17.2
B)16.4
C)14.5
D)19.4
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)1.7 B)1.9 C)1.6 D)1.8 <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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:</strong> A)1.7 B)1.9 C)1.6 D)1.8 <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation EV/Sales ratio of Ideko in 2010 is closest to:

A)1.7
B)1.9
C)1.6
D)1.8
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)1.9 B)1.7 C)1.6 D)1.8 <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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:</strong> A)1.9 B)1.7 C)1.6 D)1.8 <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation EV/Sales ratio of Ideko in 2010 is closest to:

A)1.9
B)1.7
C)1.6
D)1.8
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 unlevered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.6 B)16.4 C)14.5 D)19.0 <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 unlevered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.6 B)16.4 C)14.5 D)19.0 <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

A)17.6
B)16.4
C)14.5
D)19.0
Question
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)$152.8 million B)$181.7 million C)$301.7 million D)$272.8 million <div style=padding-top: 35px> Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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:</strong> A)$152.8 million B)$181.7 million C)$301.7 million D)$272.8 million <div style=padding-top: 35px>
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation equity value of Ideko in 2010 is closest to:

A)$152.8 million
B)$181.7 million
C)$301.7 million
D)$272.8 million
Question
What is the purpose of the sensitivity analysis?
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Deck 19: Valuation and Financial Modeling: a Case Study
1
Use the following information to answer the question(s)below:
Ideko's Planned Debt
<strong>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 2008 is closest to:</strong> A)$6800 B)$7310 C)$7820 D)$7990
If Ideko's loans will have an interest rate of 6.8%,then the interest expense paid in 2008 is closest to:

A)$6800
B)$7310
C)$7820
D)$7990
$6800
2
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?
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
3
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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:</strong> A)84 days B)95 days C)90 days D)75 days
Ideko's Accounts Receivable Days is closest to:

A)84 days
B)95 days
C)90 days
D)75 days
90 days
4
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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/EBITDA ratio of the comparable firms,Ideko's target economic value is closest to:</strong> A)$191 million B)$155 million C)$157 million D)$193 million The following are financial ratios for three comparable companies:
<strong>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/EBITDA ratio of the comparable firms,Ideko's target economic value is closest to:</strong> A)$191 million B)$155 million C)$157 million D)$193 million
Based upon the average EV/EBITDA ratio of the comparable firms,Ideko's target economic value is closest to:

A)$191 million
B)$155 million
C)$157 million
D)$193 million
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5
Use the following information to answer the question(s)below:
Ideko's Planned Debt
<strong>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:</strong> A)$6800 B)$7310 C)$7820 D)$7990
If Ideko's loans will have an interest rate of 6.8%,then the interest expense paid in 2009 is closest to:

A)$6800
B)$7310
C)$7820
D)$7990
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6
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The free cash flow to the firm in 2010 is closest to:</strong> A)10,684 B)11,559 C)23,698 D)26,394 <strong>Use the following information to answer the question(s)below:     The free cash flow to the firm in 2010 is closest to:</strong> A)10,684 B)11,559 C)23,698 D)26,394
The free cash flow to the firm in 2010 is closest to:

A)10,684
B)11,559
C)23,698
D)26,394
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7
What range for the market value of equity for Ideko is implied by the range of P/E multiples for the comparable firms?
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8
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The after tax interest expense in 2008 is closest to:</strong> A)2380 B)4420 C)6800 D)7820 <strong>Use the following information to answer the question(s)below:     The after tax interest expense in 2008 is closest to:</strong> A)2380 B)4420 C)6800 D)7820
The after tax interest expense in 2008 is closest to:

A)2380
B)4420
C)6800
D)7820
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9
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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,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:</strong> A)$165 million B)$157 million C)$193 million D)$191 million The following are financial ratios for three comparable companies:
<strong>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,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:</strong> A)$165 million B)$157 million C)$193 million D)$191 million
Based upon the average EV/Sales 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:

A)$165 million
B)$157 million
C)$193 million
D)$191 million
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10
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The free cash flow to equity in 2008 is closest to:</strong> A)-5005 B)-1755 C)5575 D)9995 <strong>Use the following information to answer the question(s)below:     The free cash flow to equity in 2008 is closest to:</strong> A)-5005 B)-1755 C)5575 D)9995
The free cash flow to equity in 2008 is closest to:

A)-5005
B)-1755
C)5575
D)9995
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11
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The after tax interest expense in 2010 is closest to:</strong> A)0 B)2856 C)5304 D)8160 <strong>Use the following information to answer the question(s)below:     The after tax interest expense in 2010 is closest to:</strong> A)0 B)2856 C)5304 D)8160
The after tax interest expense in 2010 is closest to:

A)0
B)2856
C)5304
D)8160
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12
Use the table for the question(s)below.
Ideko Sales and Operating Cost Assumptions
<strong>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?</strong> A)1702 units B)1323 units C)1505 units D)1914 units
Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2008?

A)1702 units
B)1323 units
C)1505 units
D)1914 units
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13
What range for the market value of equity for Ideko is implied by the range of EV/Sales multiples for the comparable firms if Ideko holds $6.5 million of cash in excess of its working capital needs?
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14
Use the table for the question(s)below.
Ideko Sales and Operating Cost Assumptions
<strong>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?</strong> A)1505 units B)1323 units C)1914 units D)1115 units
Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2007?

A)1505 units
B)1323 units
C)1914 units
D)1115 units
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15
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The free cash flow to equity in 2010 is closest to:</strong> A)6255 B)10,684 C)11,559 D)18,394 <strong>Use the following information to answer the question(s)below:     The free cash flow to equity in 2010 is closest to:</strong> A)6255 B)10,684 C)11,559 D)18,394
The free cash flow to equity in 2010 is closest to:

A)6255
B)10,684
C)11,559
D)18,394
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16
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     The free cash flow to the firm in 2008 is closest to:</strong> A)-5005 B)-1755 C)5575 D)14,995 <strong>Use the following information to answer the question(s)below:     The free cash flow to the firm in 2008 is closest to:</strong> A)-5005 B)-1755 C)5575 D)14,995
The free cash flow to the firm in 2008 is closest to:

A)-5005
B)-1755
C)5575
D)14,995
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17
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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:</strong> A)$157 million B)$155 million C)$193 million D)$165 million The following are financial ratios for three comparable companies:
<strong>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:</strong> A)$157 million B)$155 million C)$193 million D)$165 million
Based upon the average P/E ratio of the comparable firms,Ideko's target market value of equity is closest to:

A)$157 million
B)$155 million
C)$193 million
D)$165 million
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18
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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:</strong> A)$191 million B)$155 million C)$165 million D)$157 million The following are financial ratios for three comparable companies:
<strong>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:</strong> A)$191 million B)$155 million C)$165 million D)$157 million
Based upon the average EV/Sales ratio of the comparable firms,Ideko's target economic value is closest to:

A)$191 million
B)$155 million
C)$165 million
D)$157 million
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19
Use the tables for the question(s)below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
<strong>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/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:</strong> A)$155 million B)$157 million C)$165 million D)$193 million The following are financial ratios for three comparable companies:
<strong>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/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:</strong> A)$155 million B)$157 million C)$165 million D)$193 million
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:

A)$155 million
B)$157 million
C)$165 million
D)$193 million
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Unlock for access to all 49 flashcards in this deck.
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20
Use the table for the question(s)below.
Ideko Sales and Operating Cost Assumptions
<strong>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 2009?</strong> A)1505 units B)1115 units C)1323 units D)1702 units
Based upon Ideko's Sales and Operating Cost Assumptions,what production capacity will Ideko require in 2009?

A)1505 units
B)1115 units
C)1323 units
D)1702 units
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21
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of net working capital for Ideko in 2008 is closest to:</strong> A)$35,195 B)$26,420 C)$22,170 D)$30,510
The amount of net working capital for Ideko in 2008 is closest to:

A)$35,195
B)$26,420
C)$22,170
D)$30,510
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22
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   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:</strong> A)14.7% B)10.2% C)9.1% D)13.5%
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:

A)14.7%
B)10.2%
C)9.1%
D)13.5%
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23
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   The unlevered beta for Luxottica is closest to:</strong> A)1.00 B)0.60 C)0.70 D)1.50
The unlevered beta for Luxottica is closest to:

A)1.00
B)0.60
C)0.70
D)1.50
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24
Use the following information to answer the question(s)below: <strong>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:</strong> A)164,200 B)278,775 C)280,450 D)303,425 <strong>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:</strong> A)164,200 B)278,775 C)280,450 D)303,425
If Ideko's future expected growth rate is 5% and its WACC is 9%,then the continuation value in 2010 is closest to:

A)164,200
B)278,775
C)280,450
D)303,425
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25
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   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:</strong> A)13.5% B)10.2% C)9.1% D)14.7%
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:

A)13.5%
B)10.2%
C)9.1%
D)14.7%
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26
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)$152.8 million B)$272.8 million C)$301.7 million D)$181.7 million Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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:</strong> A)$152.8 million B)$272.8 million C)$301.7 million D)$181.7 million
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation enterprise value of Ideko in 2010 is closest to:

A)$152.8 million
B)$272.8 million
C)$301.7 million
D)$181.7 million
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27
Using the income statement above and the following information:
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.
Calculate Ideko's Free Cash Flow to the Firm and Free Cash Flow to Equity in 2009.
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28
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of the increase in net working capital for Ideko in 2008 is closest to:</strong> A)$4685 B)$3665 C)$4090 D)$5230
The amount of the increase in net working capital for Ideko in 2008 is closest to:

A)$4685
B)$3665
C)$4090
D)$5230
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29
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 2007 is closest to:</strong> A)$14,525 B)$16,970 C)$22,710 D)$19,690
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 2007 is closest to:

A)$14,525
B)$16,970
C)$22,710
D)$19,690
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30
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 equity value of Ideko in 2010 is closest to:</strong> A)$181.7 million B)$272.8 million C)$152.8 million D)$301.7 million Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 equity value of Ideko in 2010 is closest to:</strong> A)$181.7 million B)$272.8 million C)$152.8 million D)$301.7 million
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation equity value of Ideko in 2010 is closest to:

A)$181.7 million
B)$272.8 million
C)$152.8 million
D)$301.7 million
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31
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 2006 is closest to:</strong> A)$19,690 B)$16,970 C)$22,710 D)$14,525
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 2006 is closest to:

A)$19,690
B)$16,970
C)$22,710
D)$14,525
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32
Using the income statement above and the following information:
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.
Calculate Ideko's Free Cash Flow to the Firm and Free Cash Flow to Equity in 2007.
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33
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of net working capital for Ideko in 2007 is closest to:</strong> A)$30,510 B)$26,420 C)$22,170 D)$35,195
The amount of net working capital for Ideko in 2007 is closest to:

A)$30,510
B)$26,420
C)$22,170
D)$35,195
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34
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   The unlevered beta for Nike is closest to:</strong> A)0.70 B)1.00 C)1.50 D)0.60
The unlevered beta for Nike is closest to:

A)0.70
B)1.00
C)1.50
D)0.60
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35
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of the increase in net working capital for Ideko in 2007 is closest to:</strong> A)$4090 B)$4685 C)$3665 D)$5230
The amount of the increase in net working capital for Ideko in 2007 is closest to:

A)$4090
B)$4685
C)$3665
D)$5230
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36
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>Use the table for the question(s)below. Pro Forma Income Statement for Ideko,2005-2010   The amount of net working capital for Ideko in 2006 is closest to:</strong> A)$22,750 B)$35,195 C)$30,510 D)$26,420
The amount of net working capital for Ideko in 2006 is closest to:

A)$22,750
B)$35,195
C)$30,510
D)$26,420
Unlock Deck
Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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37
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   The unlevered beta for Oakley is closest to:</strong> A)0.70 B)1.50 C)1.00 D)0.60
The unlevered beta for Oakley is closest to:

A)0.70
B)1.50
C)1.00
D)0.60
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Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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38
Use the table for the question(s)below.
Capital Structure and Unlevered Beta Estimates for Comparable Firms
<strong>Use the table for the question(s)below. Capital Structure and Unlevered Beta Estimates for Comparable Firms   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:</strong> A)10.2% B)13.5% C)9.1% D)14.7%
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:

A)10.2%
B)13.5%
C)9.1%
D)14.7%
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Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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39
Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)$14,525 B)$19,690 C)$22,710 D)$16,970
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:

A)$14,525
B)$19,690
C)$22,710
D)$16,970
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Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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40
Use the following information to answer the question(s)below: <strong>Use the following information to answer the question(s)below:     If Ideko's future expected growth rate is 5%,then the estimated free cash flow for 2011 is closest to:</strong> A)6568 B)11,151 C)11,218 D)12,137 <strong>Use the following information to answer the question(s)below:     If Ideko's future expected growth rate is 5%,then the estimated free cash flow for 2011 is closest to:</strong> A)6568 B)11,151 C)11,218 D)12,137
If Ideko's future expected growth rate is 5%,then the estimated free cash flow for 2011 is closest to:

A)6568
B)11,151
C)11,218
D)12,137
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Unlock for access to all 49 flashcards in this deck.
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41
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 enterprise value of Ideko in 2010 is closest to:</strong> A)$181.7 million B)$152.8 million C)$272.8 million D)$301.7 million Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 enterprise value of Ideko in 2010 is closest to:</strong> A)$181.7 million B)$152.8 million C)$272.8 million D)$301.7 million
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation enterprise value of Ideko in 2010 is closest to:

A)$181.7 million
B)$152.8 million
C)$272.8 million
D)$301.7 million
Unlock Deck
Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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42
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 levered P/E ratio of Ideko in 2010 is closest to:</strong> A)19.0 B)17.2 C)16.4 D)14.5 Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 levered P/E ratio of Ideko in 2010 is closest to:</strong> A)19.0 B)17.2 C)16.4 D)14.5
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation levered P/E ratio of Ideko in 2010 is closest to:

A)19.0
B)17.2
C)16.4
D)14.5
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Unlock for access to all 49 flashcards in this deck.
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43
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 levered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.2 B)14.5 C)19.0 D)16.4 Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 levered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.2 B)14.5 C)19.0 D)16.4
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation levered P/E ratio of Ideko in 2010 is closest to:

A)17.2
B)14.5
C)19.0
D)16.4
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Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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44
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 unlevered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.2 B)16.4 C)14.5 D)19.4 Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 unlevered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.2 B)16.4 C)14.5 D)19.4
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

A)17.2
B)16.4
C)14.5
D)19.4
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Unlock Deck
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45
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)1.7 B)1.9 C)1.6 D)1.8 Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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:</strong> A)1.7 B)1.9 C)1.6 D)1.8
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation EV/Sales ratio of Ideko in 2010 is closest to:

A)1.7
B)1.9
C)1.6
D)1.8
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Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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46
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)1.9 B)1.7 C)1.6 D)1.8 Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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:</strong> A)1.9 B)1.7 C)1.6 D)1.8
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation EV/Sales ratio of Ideko in 2010 is closest to:

A)1.9
B)1.7
C)1.6
D)1.8
Unlock Deck
Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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47
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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 unlevered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.6 B)16.4 C)14.5 D)19.0 Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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 unlevered P/E ratio of Ideko in 2010 is closest to:</strong> A)17.6 B)16.4 C)14.5 D)19.0
Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

A)17.6
B)16.4
C)14.5
D)19.0
Unlock Deck
Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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48
Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
<strong>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:</strong> A)$152.8 million B)$181.7 million C)$301.7 million D)$272.8 million Pro Forma Balance Sheet for Ideko,2005-2010
<strong>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:</strong> A)$152.8 million B)$181.7 million C)$301.7 million D)$272.8 million
Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation equity value of Ideko in 2010 is closest to:

A)$152.8 million
B)$181.7 million
C)$301.7 million
D)$272.8 million
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Unlock for access to all 49 flashcards in this deck.
Unlock Deck
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49
What is the purpose of the sensitivity analysis?
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Unlock Deck
Unlock for access to all 49 flashcards in this deck.