Carlton Polish Case Essay

It is important to know the proper technique and method of valuing a company because different people may have different ways of assessing the value; it is also important in understanding the bank’s method of appraising and valuing a company or business

1. In the last five years the growth in sales for the company has been around 10% per annum, except for the 1997, the growth was 18.78%. In the case, nothing is mentioned that company has made any drastic changes in its strategy to grow faster. In such a scenario, projected a consistent growth of 20% per annum for the next 5 years is too optimistic.

From an operational perspective, the annual sales growth of 2% is behind the industry average of 6% per

• Coleco is dependent on debt through years (also successful ones) • The company has a huge amount of total liabilities (in 1987 about $ 620 mln) • No resources to pay debts (Negative equity, Assets are generally composed of Accounts receivables) • Company by the moment already does not comply with the creditors requirements

Total shareholders’ equity increased $21,735,000 or 3.9% YoY. Capital stock and contributed surplus increases were quite insignificant, but accumulated other comprehensive income increased 114.4% YoY, and the accumulated deficit decreased $77,104,000 or 54.2% YoY. Other equity is now at zero from ($154,239,000) last year (refer to financial liability) due to the final payment made for the remaining 45% stake in Honsel

The dividends to Kennecott equal to the difference between Carborundum’s net income after adjustment and the profit retention. The methodology Kennecott’s management team used to determine the value of Carborundum to Kennecott was evaluated using an incorrect set of cash flows. First, it subtracted out the profit retention requirements needed to support Carborundum’s growth even though Kennecott would own the full equity in Carborundum, which is incorrect. Second, depending on the method used to value the company, the relevant set of cash flow is needed to be determined, either the free cash flow to the firm or the free cash flow to equity.

1. Using the excel spreadsheet provided, and the recommended consequential disclosures as a basis you your analysis, what recommendations would you give Phillips on each of the items listed below? In each case, justify your recommendations and estimate how much the decision will change the “true” value of the company and its value in the eyes of an investor in a private company.

2) Given that BT Yellow Pages accounted for 85% of the U.K. classified directories advertising revenues, we assume it would keep the market growth rate of 5.5%, above 2001 yoy data 4.9% in 2001 but below the 1996-1999 industry data

Analyse the company’s financial performance, over two years, using the following ratios (you will need to present your results):

In this specific Case, that has asked the Sale growth for the four-year period, can be calculated ‎as bellow;‎

As the economic condition and consumer sentiment improves, JBH might be able to fully capitalize and book unexpectedly strong growth in the next several years. On the other hand, if expected economic recovery turned out to be a disappointment, or management decided to abruptly halt the company’s expansion, the assumed growth rate might be too optimistic.

Before we make the decision, we need to know the value of the Media General and the value of this offer. So we forecast the value of company by DCF model.

While performing a DCF analysis, a thorough understanding of the business being analyzed is needed to determine the correct assumptions and items used for the analysis. For this reason, Laura believed this was still a good method to value stocks in this industry. This analysis yields a higher company value than current price.

The next 3 years witnessed a continuous increase in sales and revenues. Their profit margin increased to reach 4.97% by year 1992.

The two methods that are used by the expert include the comparable transactions method, which uses the multiples in the market to determine the value, and also the DCF method, which is used to discount the future cash flows back to determine the current value of the shares. Different methods have different strengths and weaknesses. According to Ross (2009), the comparable transaction method is used and the strength is that it uses the historical actual transactions that are comparable to the Woolworths transaction, so that the valuation is justified by the market conditions. In the meantime, the weakness of the comparable transaction is that different transactions have different companies involved and the transactions are conducted in