Fundamentals of Corporate Finance (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134475561
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
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Textbook Question
Chapter 10, Problem 20P
Consider the following data for the airline industry for December 2015 (EV= enterprise value, Book = equity book value). Discuss the potential challenges of using multiples to value an airline.
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1) Analyze the time-series of each company’s sales growth (i.e., growth in operating revenue). If you average sales growth over the 2015 through 2019 period, which airline is experiencing greater growth pre-COVID19?a) DELTA
b) ALLEGIANT
2) Analyze each company’s gross margin (operating income, or EBIT, divided by operating revenue). Which company has better historical pre-COVID19 gross margins?a) DELTAb) ALLEGIANT
3) Understanding that depreciation expense is largely dependent on management decision making, recalculate gross margin but add depreciation and amortization back to EBIT; in other words, calculate gross margin using EBITDA. Does examining gross margin using EBITDA change your answer to question #2?
a) Yes b) No
4) With respect to leverage, company _______ is more highly levered (i.e., has more debt) than company _______.a) DELTA, ALLEGIANTb) ALLEGIANT, DELTA
5) Compute ROE as NI ÷ (Average Owners’ Equity). Delta’s 2019 ROE is approximately _____ and Allegiant’s 2019 ROE is…
USA Airlines uses the following performance measures. Classify the performance measures belowinto the most likely balanced scorecard perspective it relates to. Label your answers using C (customer),P (internal process), I (innovation and growth), or F (financial). Cash flow from operations
Please explain how to answer these questions, including the formulas I should use, the steps I should follow, and which financial statements to look at if relevant.
1.5 Calculate the sustainable growth rate for Top Harvest using the financial results of 2020/21 and comment on how Top Harvest could improve their sustainable growth rate in the future.
1.7 Calculate the Economic Value Added for Top Harvest (using Total Assets and not Net Assets) and comment on the performance of the business and how they could improve the EVA
1.6 Calculate the Weighted Average Cost of Capital for Top Harvest using the following information:
Chapter 10 Solutions
Fundamentals of Corporate Finance (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 10 - Prob. 1CCCh. 10 - Why do we ignore interest payments on the firm's...Ch. 10 - Prob. 3CCCh. 10 - What implicit assumptions do we make when valuing...Ch. 10 - State the efficient markets hypothesis.Ch. 10 - Prob. 6CCCh. 10 - Prob. 7CCCh. 10 - Prob. 8CCCh. 10 - What are the advantages of valuing a stock based...Ch. 10 - Prob. 2CT
Ch. 10 - Prob. 3CTCh. 10 - Prob. 4CTCh. 10 - Prob. 5CTCh. 10 - Prob. 6CTCh. 10 - Prob. 7CTCh. 10 - Prob. 8CTCh. 10 - Prob. 9CTCh. 10 - Prob. 1CQCh. 10 - Compute the IRR and payback period of each...Ch. 10 - Estimate Nanovo's equity cost of capital. Use it...Ch. 10 - Should Nanovo expand the plant? If so, which...Ch. 10 - Prob. 5CQCh. 10 - Suppose Nanovo announces the major expansion and...Ch. 10 - DATA CASE As a new junior analyst for a large...Ch. 10 - Prob. 2DCCh. 10 - Prob. 3DCCh. 10 - Prob. 4DCCh. 10 - Prob. 5DCCh. 10 - To calculate an estimate of JNJ price based on a...Ch. 10 - Compare the stock prices produced by the two...Ch. 10 - Prob. 8DCCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Consider the valuation of Nike given in Example...Ch. 10 - 10. You are evaluating the stock price Of Kroger,...Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - SLYMN Enterprises has a P/E ratio of 12 and a...Ch. 10 - Prob. 16PCh. 10 - Prob. 17PCh. 10 - Prob. 18PCh. 10 - Prob. 19PCh. 10 - Consider the following data for the airline...Ch. 10 - Prob. 21PCh. 10 - Summit Systems has an equity cost of capital of...Ch. 10 - Assume that Cola Co. has a share price of $43. The...Ch. 10 - Roybus, Inc., a manufacturer of flash memory, just...Ch. 10 - Prob. 25PCh. 10 - 26. You have a $100,000 portfolio made up of 15...Ch. 10 - Prob. 27P
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