Valuation,,,Equity Research Update

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Question Description

Case 3: Valuation

Context: You recently joined Morningstar as an equity research analyst. Your task is to value a firm from the restaurant industry using relative and discounted cash flow valuation techniques. Use your financial projection from Case 2 to value the firm – you are free to change the assumptions you made in Case 2.

You must prepare an Excel file and a 3-4 page Equity Research Update that includes an investment thesis and valuation as in the McDonald’s Morningstar Equity Analyst Report. You do not need to include items other than the investment thesis and valuation but you may include additional items if you choose to do so. Your write up must be 4 pages or less.

For the firm you selected find:

1. The enterprise value

2. The total equity value (market capitalization)

3. The implied share price

You must find each of the above values using each of the 5 approaches covered in class. Note that in approaches where you use a multiple DO NOT simply use the firm’s multiple but rather the multiple of similar firms. The idea is to see if the current multiple applied by the market is accurate.

Ø Create data tables to perform sensitivity analysis on the results from approaches C and D.

Ø Discuss the results under the various scenarios created in Case 2.

Ø Which assumptions are most critical to the analysis?

Ø Summarize your conclusions. Do you think the stock is currently fairly valued in the market?

For EXCEL file, I already did every thing. I want report beads on outline

Unformatted Attachment Preview

Dunkin Hist. Hist. Assumptions 2014 2015 Income Statement Assumptions Sales growth - % Cost of sales - % of sales - excl depreciation Selling and administrative expense - % sales - excl amortization Impairment and other - $ Other operating expenses - $ Interest income - % return on cash & equivalents Nonoperating income, net - $ Income taxes - % income before taxes Basic WASO Diluted WASO Depreciation - % PY net PP&E 19.90% (42.37) 1.43 (21.64) 42.58% 96.05 97.13 Dividends per share growth rate BalanceAccounts Sheetreceivable, Assumptions net - % sales Inventories - % COGS Prepaids and other current assets - % sales CapEx - $ Inv & advances affiliates - $ Goodwill - $ Other long-term assets - $ Accounts payable - % COGS 30.25 Accrued liabilities - % COGS Long-term debt (inc. current portion) - $ repayment from debt note Long term income taxes Deferred income taxes - $ rethink Other long term liabilities - % sales Common stock - $ Additional paid in capital - $ Treasury stock - $ Accum other income - $ Interest rate on debt Repayment of long- term debt 1,837.82 $ Hist. Hist. Proj Proj Proj Proj Proj 2016 2017 2018 2019 2020 2021 2022 2.21% 17.93% 30% 14.40 9.38 0.16% (1.20) 35.09% 91.57 92.54 3.81% 15.96% 30% 13.58 0.63 0.33% (6.61) -3.22% 90.86 92.23 11.37% 0.00% 17.00% 32% 0.00 42.67 1.00% (1.20) 21.00% 93.00 94.00 10.00% 1.00% 19.00% 32% 0.00 42.68 1.50% 19.50% 34% 0.00 42.70 2.00% 19.50% 30% 0.00 42.69 2.00% 19.50% 30% 0.00 42.66 1.15% 1.30% 1.45% 1.60% (6.61) 21.00% 93.00 94.00 13.00% (1.20) 21.00% 93.00 94.00 13.00% (6.61) 21.00% 93.00 94.00 13.00% (1.20) 21.00% 93.00 94.00 13.00% 14.48% 7.49% 10.00% 10.00% 10.00% 10.00% 10.00% 10.28% 11.91% 13.00% 13.00% 13.00% 13.00% 13.00% 74.08% 3.47% 15.17 114.74 888.27 1,441.35 8.53% 102.99% 3.80% 12.43 140.62 888.31 1,422.62 11.88% 110.00% 3.81% 10.00 140.64 888.31 1,422.62 13.00% 103.01% 3.82% 13.00 140.64 888.31 1,422.62 14.00% 103.01% 3.83% 15.00 140.65 888.31 1,422.62 15.50% 103.02% 3.83% 17.00 140.70 888.31 1,422.62 16.00% 103.04% 3.85% 25.00 140.69 888.31 1,422.62 16.00% 25.00 $ 31.50 $ 31.50 $ 31.50 $ 31.50 $ 31.50 $ 31.50 35.17% 42.25% 42.25% 41.00% 41.00% 41.00% 41.00% 90.48 473.96 94.78 326.41 94.78 326.41 94.78 326.41 94.78 326.41 94.78 326.41 94.78 326.41 0.00% 0.09 807.49 (1.06) (23.98) 5.00% 25.00 0.00% 0.09 724.11 (1.06) (9.69) 5.50% 754.38 0.00% 0.09 724.11 (1.06) (9.69) 6.00% 250.00 0.00% 0.09 724.11 (1.06) (9.69) 5.50% 250.00 0.00% 0.09 724.11 (1.06) (9.69) 5.50% 250.00 0.00% 0.09 724.11 (1.06) (9.69) 5.00% 250.00 0.00% 0.09 724.11 (1.06) (9.69) 5.00% 250.00 in key word, Write in red cell why did take this assumption? I take this assumption because I think it will remain constant because the sales ratio outlines future constant growth o I take this assumptiom because I think the cost of sales will keep depreciating in future depending its percentage I take this assumption because I think the sales will just remain constant in the future unless the sales expands it will be of different levels but within the same margins depending on the magnitude of the impairement it will remain constant in future. i take this consumption because I think it will remain constant in future for a certain period then it will increase i take this assumption because it will keep fluacting in future i assume it will keep changing in future depending on the range of income taxed and then remain constant i am of this assumption that it will be changing but after a certain period in future I take this assumption that it will remain constant. I take this assumption that it will remain constant in future i take this assumption that it will be changing in future but after a certain period i take the assumption because it will remain constant after some time i take the assumption because it will keep fluctuating in future i take this assumption that it will change but after sometimes in future i take this assumption that it will keep changing in future I assume $25 million based on this being the average over the last three years (and enough to replace the PP&E lost from d i take this assumption because it will keep increasing in future i take the assumption that it will remain constant in future. i take the assumption that it will remain constant in future. i take this assumption that it will remain constant in future it will reduce but after sometimes it will remain constant in future it will remain constant in future it will remain zero in future I am of the assumption that it will remain constant in future it will remain constant in future It will remain constant in future I take this assumption that it will remain constant in future It will keep changing in future It will remain constant in future in key word, Write in red cell why did take this assumption? cause I think it will remain constant because the sales ratio outlines future constant growth of 2.00% om because I think the cost of sales will keep depreciating in future depending its percentages ption because I think the sales will just remain constant in the future unless the sales expands erent levels but within the same margins depending on the magnitude of the impairement it will remain constant in future. mption because I think it will remain constant in future for a certain period then it will increase i take this assumption because it will keep fluacting in future keep changing in future depending on the range of income taxed and then remain constant m of this assumption that it will be changing but after a certain period in future I take this assumption that it will remain constant. I take this assumption that it will remain constant in future ake this assumption that it will be changing in future but after a certain period i take the assumption because it will remain constant after some time i take the assumption because it will keep fluctuating in future i take this assumption that it will change but after sometimes in future i take this assumption that it will keep changing in future n this being the average over the last three years (and enough to replace the PP&E lost from depreciation) i take this assumption because it will keep increasing in future i take the assumption that it will remain constant in future. i take the assumption that it will remain constant in future. i take this assumption that it will remain constant in future it will reduce but after sometimes it will remain constant in future it will remain constant in future it will remain zero in future I am of the assumption that it will remain constant in future it will remain constant in future It will remain constant in future I take this assumption that it will remain constant in future It will keep changing in future It will remain constant in future Dunkin Hist. Hist. Hist. Hist. Hist. Proj. Revenues Assumption 2013 2014 2015 2016 2017 2018 US Operations Revenues growth rate 563.33 594.74 5.57% 638.20 7.31% 655.48 2.71% 691.10 5.43% 808.59 17.00% International Revenues growth rate 138.65 139.44 140.05 141.92 135.25 Other Revenues growth rate Total Revenues growth rate 0.57% 0.44% 1.33% -4.70% 156.89 16.00% 11.86 14.53 22.52% 32.68 124.91% 31.50 -3.63% 34.15 8.42% 39.61 16.00% 713.84 748.71 810.93 828.89 2.21% Revenue growth scenario 860.50 1,005.09 3.81% 16.80% 1 Overall growth rate Base case Upside case Downside case 0.00% 0.00% 1.00% -2.00% Proj. Proj. Proj. Proj. 2019 2020 2021 2022 873.27 8.00% 943.14 1,018.59 1,100.07 8.00% 8.00% 8.00% 166.31 6.00% 176.29 6.00% 186.86 6.00% 198.07 6.00% 41.99 6.00% 44.51 6.00% 47.18 6.00% 50.01 6.00% 1,081.57 1,163.93 1,252.63 1,348.16 7.61% 7.61% 7.62% 7.63% 1.00% 1.00% 2.00% -1.00% 1.50% 1.50% 2.50% 0.00% 2.00% 2.00% 3.00% 1.00% 2.00% 2.00% 3.00% 2.00% DUNKKIN Hist Hist Hist 2014 2015 810.93 161.39 2016 828.89 148.61 Gross profit 649.55 680.28 Selling and administrative expense - excl amortization EBITDA 243.80 405.75 246.81 433.47 20.56 20.46 EBIT 385.19 413.01 Impairment and other Other operating expenses/(income) - p. 43 Operating profit as reported (42.37) 1.43 344.26 14.40 9.38 436.79 Interest income Interest expense Nonoperating income(expense) 0.42 (96.77) (21.64) 0.58 (100.85) (1.20) Income before taxes 226.28 335.33 Income taxes Net income 96.36 129.92 117.67 217.66 (100.52) (109.70) 96.05 97.13 1.35 1.34 1.05 91.57 92.54 2.38 2.35 1.20 Income statement. Milliona Revenues Cost of sales - excluding D&A on PP&E Depreciation Dividends paid Net earning per share Basic WASO Diluted WASO Basic earnings per common share Diluted earnings per common share Dividends per common share Hist Proj Proj Proj Proj Proj 2017 860.50 137.31 2018 860.50 146.29 2019 869.11 165.13 2020 882.14 172.02 2021 899.79 175.46 2022 917.78 178.97 723.19 714.22 703.98 710.12 724.33 738.81 248.98 474.21 275.36 438.86 278.11 425.86 295.52 414.61 269.94 454.39 275.33 463.48 20.08 16.90 21.07 20.02 19.37 19.06 454.13 421.96 404.79 394.58 435.02 444.42 13.58 0.63 468.34 0.00 42.67 464.63 0.00 42.68 447.47 0.00 42.70 437.28 0.00 42.69 477.71 0.00 42.66 487.08 3.31 (104.42) (6.61) 10.18 (182.15) (1.20) 9.79 (153.22) (6.61) 9.08 (139.47) (1.20) 7.73 (114.29) (6.61) 6.30 (101.79) (1.20) 360.62 291.46 297.43 305.70 364.54 390.39 (11.62) 372.24 61.21 230.25 62.46 234.97 64.20 241.50 76.55 287.99 81.98 308.41 (117.00) (131.74) (144.91) (159.40) (175.34) (192.88) 90.86 92.23 4.10 4.04 1.29 93.00 94.00 2.48 2.45 1.42 93.00 94.00 2.53 2.50 1.56 93.00 94.00 2.60 2.57 1.71 93.00 94.00 3.10 3.06 1.89 93.00 94.00 3.32 3.28 2.07 1000 DUNKKIN Balance sheet. Millions Assets Cash & equivalents Accounts receivable, net Inventories Prepaids and other current assets Assets held for sale Total current assets Hist Hist Hist Hist 2014 2015 2016 2017 361.43 85.18 110.08 28.74 20.93 606.36 1,018.32 102.52 141.42 32.70 21.88 1,316.84 Net P,P&E Inv & advances affiliates Goodwill Other long-term assets Total non-current assets 176.66 114.74 888.27 1,441.35 2,621.02 169.01 140.62 888.31 1,422.62 2,620.55 TOTAL ASSETS 3,227.38 3,937.38 12.68 52.27 25.00 334.25 424.20 16.31 58.01 31.50 366.07 471.89 Long-term debt (inc. current portion) Deferred income taxes Long term income taxes Other long term liabilities Total non-current liabilities 2,402.00 473.96 90.48 3,035.86 326.41 94.78 2,966.44 3,457.05 Total liabilities 3,390.64 3,928.94 Liabilities & Equity Financing gap Accounts payable Accrued liabilities short term debt Liabilities held for sale Total current liabilities Common stock Additional paid in capital Retained earnings Treasury stock Accum other income Total equity TOTAL LIABILITIES & EQUITY Does balance sheet balance? 0.09 807.49 (945.80) (1.06) (23.98) (163.26) 0.09 724.11 (705.01) (1.06) (9.69) 8.45 3,227.38 3,937.38 0.00 0.00 Proj Proj Proj Proj Proj 2018 2019 2020 2021 2022 851.28 111.87 160.91 32.79 21.88 1,178.73 698.70 112.98 170.10 33.20 21.88 1,036.86 532.80 114.68 177.20 33.79 21.88 880.34 394.05 116.97 180.76 34.46 21.88 748.12 248.79 119.31 184.41 35.33 21.88 609.73 162.10 140.64 888.31 1,422.62 2,613.67 154.03 140.64 888.31 1,422.62 2,605.60 149.01 140.65 888.31 1,422.62 2,600.59 146.64 140.70 888.31 1,422.62 2,598.26 152.57 140.69 888.31 1,422.62 2,604.19 3,792.40 3,642.46 3,480.93 3,346.39 3,213.92 0.00 19.02 61.80 31.50 366.07 478.39 0.00 23.12 67.70 31.50 366.07 488.39 0.00 26.66 70.53 31.50 366.07 494.76 0.00 28.07 71.94 31.50 366.07 497.58 0.00 28.63 73.38 31.50 366.07 499.58 2,785.86 326.41 94.78 2,535.86 326.41 94.78 2,285.86 326.41 94.78 2,035.86 326.41 94.78 1,785.86 326.41 94.78 3,207.05 2,957.05 2,707.05 2,457.05 2,207.05 3,685.44 3,445.44 3,201.81 2,954.63 2,706.63 0.09 724.11 (606.49) (1.06) (9.69) 106.96 0.09 724.11 (516.43) (1.06) (9.69) 197.02 0.09 724.11 (434.33) (1.06) (9.69) 279.12 0.09 724.11 (321.69) (1.06) (9.69) 391.76 0.09 724.11 (206.16) (1.06) (9.69) 507.29 3,792.40 3,642.46 3,480.93 3,346.39 3,213.92 0.00 0.00 0.00 0.00 0.00 Dunkin Calcs PP&E PP&E - beg CAPEX Depreciation PP&E - end Other long term assets - beg Additions to other long term assets Amortization Other long term assets - end Reconciliation of RE RE - beg Net income Dividends RE - end Hist. Hist. Hist. Hist. Hist. 2013 2014 2015 2016 2017 15.17 20.46 176.66 176.66 12.43 20.08 169.01 30.25 20.56 1,422.62 (705.01) Proj. Proj. Proj. Proj. Proj. 2018 2019 2020 2021 2022 169.01 10.00 16.90 162.10 162.10 13.00 21.07 154.03 154.03 15.00 20.02 149.01 149.01 17.00 19.37 146.64 146.64 25.00 19.06 152.57 1,422.62 0.00 0.00 1,422.62 1,422.62 0.00 0.00 1,422.62 1,422.62 0.00 0.00 1,422.62 1,422.62 0.00 0.00 1,422.62 1,422.62 0.00 0.00 1,422.62 (705.01) 230.25 131.74 (606.49) (606.49) 234.97 144.91 (516.43) (516.43) 241.50 159.40 (434.33) (434.33) 287.99 175.34 (321.69) (321.69) 308.41 192.88 (206.16) Dunkin Hist. Hist. Hist. Hist. debt. 2014 2015 2016 2017 Revolver Ending balance Interest rate on debt Interest expense - use beginning balance Long term debt Beginning balance Repayment Ending balance Interest rate on debt Interest expense - use beginning balance Total interest expense - using beginning balance 0.00 3,035.86 Proj. Proj. Proj. Proj. Proj. 2018 2019 2020 2021 2022 0.00 6.00% 0.00 3,035.86 250.00 2,785.86 0.00 5.50% 0.00 2,785.86 250.00 2,535.86 0.00 5.50% 0.00 2,535.86 250.00 2,285.86 0.00 5.00% 0.00 2,285.86 250.00 2,035.86 0.00 5.00% 0.00 2,035.86 250.00 1,785.86 6.00% 182.15 5.50% 153.22 5.50% 139.47 5.00% 114.29 5.00% 101.79 182.15 153.22 139.47 114.29 101.79 Dunkin Hist. Hist. Hist. Hist. Hist. Cash flow. Millions 2013 2014 2015 2016 2017 Net income Depreciation Amortization Accounts receivable, net Inventories Prepaids and other current assets Assets held for sale Accounts payable Accrued liabilities Liabilities held for sale Deferred income taxes Long term income taxes Other long term liabilities Operating cash flows CAPEX Inv & advances affiliates short term debt Goodwill Investing cash flows Long-term debt (inc. current portion) Common stock Additional paid in capital Treasury stock Accum other income Dividends Financing cash flows Change in cash Cash - beg Change in cash Cash - end 1,018.32 Proj. Proj. Proj. Proj. Proj. 2018 230.25 16.90 0.00 (9.34) (19.49) (0.09) 0.00 2.71 3.79 0.00 0.00 0.00 0.00 224.73 2019 234.97 21.07 0.00 (1.12) (9.19) (0.41) 0.00 4.10 5.90 0.00 0.00 0.00 0.00 255.32 2020 241.50 20.02 0.00 (1.69) (7.09) (0.59) 0.00 3.54 2.82 0.00 0.00 0.00 0.00 258.52 2021 287.99 19.37 0.00 (2.29) (3.56) (0.68) 0.00 1.41 1.41 0.00 0.00 0.00 0.00 303.65 2022 308.41 19.06 0.00 (2.34) (3.65) (0.87) 0.00 0.56 1.44 0.00 0.00 0.00 0.00 322.61 (10.00) (0.02) 0.00 0.00 (10.03) (13.00) 0.00 0.00 0.00 (13.00) (15.00) (0.01) 0.00 0.00 (15.01) (17.00) (0.05) 0.00 0.00 (17.05) (25.00) 0.01 0.00 0.00 (24.99) (250.00) 0.00 0.00 0.00 0.00 (131.74) (381.74) (250.00) 0.00 0.00 0.00 0.00 (144.91) (394.91) (250.00) 0.00 0.00 0.00 0.00 (159.40) (409.40) (250.00) 0.00 0.00 0.00 0.00 (175.34) (425.34) (250.00) 0.00 0.00 0.00 0.00 (192.88) (442.88) (167.03) (152.59) (165.90) (138.75) (145.26) 1,018.32 (167.03) 851.28 851.28 (152.59) 698.70 698.70 (165.90) 532.80 532.80 (138.75) 394.05 394.05 (145.26) 248.79 DUNKKIN Ratio Growth Sales growth Sales CAGR 2015 - 2017 EBITDA growth Net income growth Profitability Operating margin EBIT margin EBITDA margin Net income margin Return on equity - ROE total Leverage & Coverage Net debt Gross debt / EBITDA EBITDA / interest expense Asset management Receivable days Inventory days Payable days Cash conversion cycle OWC OWC - another approach OWC to sales Net PPE /Sales CAPEX/Sales CAPEX/Depreciation Gross PP&E Accumulated depreciation Accumulated depreciation/Gross PP&E Free cash flow EBIT Tax rate NOPAT D&A CAPEX New investment OWC FCF Hist. Hist. 2014 2015 3.01% 42.45% 47.50% 50.03% 16.02% (4.19) 3.73% 1.47 385.2 43% 221.2 (30.2) 190.9 Hist. Hist. Proj Proj Proj Proj Proj 2016 2017 2018 2019 2020 2021 2022 2.21% 3.81% 0.00% 1.00% 1.50% 2.00% 2.00% 7.22% 67.53% 9.96% 71.02% -7.08% -38.14% -4.07% 2.05% -2.52% 2.78% 10.25% 19.25% 2.16% 7.09% 52.70% 49.83% 52.29% 26.26% -133.32% 54.43% 52.77% 55.11% 43.26% 4406.82% 53.99% 49.04% 51.00% 26.76% 215.27% 51.49% 46.58% 49.00% 27.04% 119.26% 49.57% 44.73% 47.00% 27.38% 86.52% 53.09% 48.35% 50.50% 32.01% 73.51% 53.07% 48.42% 50.50% 33.60% 60.80% 2,040.57 5.54 (4.30) 2,017.54 6.40 (4.54) 1,934.57 6.35 (2.41) 1,837.16 5.95 (2.78) 1,753.06 5.51 (2.97) 1,641.80 4.48 (3.98) 1,537.06 3.85 (4.55) 37.51 270.38 31.15 276.74 (245.59) 134.05 16.17% 21.31% 1.83% 0.74 301.34 (124.68) (0.41) 43.49 375.92 43.35 376.06 (332.71) 170.82 19.85% 19.64% 1.44% 0.62 302.85 (133.84) (0.44) 47.45 401.50 47.45 401.50 (354.05) 193.24 22.46% 18.84% 1.16% 0.59 302.85 (133.84) (0.44) 47.45 375.99 51.10 372.34 (321.24) 193.96 22.32% 17.72% 1.50% 0.62 302.85 (133.84) (0.44) 47.45 375.99 56.58 366.86 (310.29) 196.97 22.33% 16.89% 1.70% 0.75 302.85 (133.84) (0.44) 47.45 376.02 58.40 365.07 (306.67) 200.68 22.30% 16.30% 1.89% 0.88 302.85 (133.84) (0.44) 47.45 376.10 58.40 365.15 (306.75) 205.54 22.40% 16.62% 2.72% 1.31 302.85 (133.84) (0.44) 413.0 35% 268.1 20.6 (15.2) 454.1 -3% 468.8 20.5 (12.4) (36.8) 440.0 422.0 21% 333.3 20.1 (10.0) (22.4) 321.0 404.8 21% 319.8 16.9 (13.0) (0.7) 323.0 394.6 21% 311.7 21.1 (15.0) (3.0) 314.8 435.0 21% 343.7 20.0 (17.0) (3.7) 343.0 444.4 21% 351.1 19.4 (25.0) (4.9) 340.6 273.5 DUNKKIN WACC Amt of debt share price # shares Mkt cap Total capital % Debt % Equity Cost of debt MTR 10 yr USG ERP Beta Cost of equity WACC 3,067.36 71.50 82.18 5,875.87 9,096.91 33.7% 64.6% 2.50% 25.68% 3.2% 5.5% 0.817 7.7% 5.5958750761110300% DUNKKIN Inputs growth scenario Hist. Proj 2017 2018 Base case EBIT Depreciation & amortization 454.13 20.08 421.96 16.90 (22.42) (10.00) 21.00% Change in OWC & other operating cash flows CAPEX Tax rate FCF long run growth rate WACC Cash & Investments Value of Debt Shares of stock outstanding EV/EBITDA multiple (ltm) 2.00% 5.60% 1,158.93 3,067.36 92.23 15.00 Starbucks BASIC APPROACHES THAT USE ONLY NEXT YEAR'S FORECAST A: Enterprise Valuation: Relative Valuation using Trailing EBITDA Multiple EBITDA EV Equity value Share price 474 7,113.20 5,205 $ 56.43 B: Enterprise Valuation Assuming Constant Growth FCF EV Equity value Share price 317.82 8,838 6,930 $ 75.14 APPROACHES THAT USE A MULTI-YEAR FORECAST C: Enterprise Valuation: Use Forecast since we assume Non-Constant Growth over short Calculations Variable growth phase Year (for discounting) 1 Free cash flow 318 Present value of FCF 318 TV using EBITDA multiple PV of TV 5,295 Enterprise value Equity value Share price 6,937 5,028 $ 54.52 D: Enterprise Valuation: Use Forecast since we assume Non-Constant Growth over short Stable growth phase Free cash flow during first year of stable growth Enterprise value when growth becomes stable Present value of enterprise value in stable phase 7,352 Enterprise value 8,993 Equity value 7,085 Share price $ 76.82 Free Cash Flow Valuation of an Enterprise under a 60 Year Time Horizon E: Enterprise Valuation Assuming Non-Constant Growth and Finite Time Horizon Inputs Calculations Year Free cash flow FCF growth rate expected Output 2018 318 Year (for discounting) Free Cash Flow PV of FCF Enterprise Value for 60 year time horizon Equity value Share price 1 318 301 7,654 5,745 $ 62.29 Proj Proj Proj Proj 2019 2020 2021 2022 `1` 404.79 21.07 (0.72) (13.00) 21.00% Domino's 394.58 20.02 (3.01) (15.00) 21.00% 435.02 19.37 (3.71) (17.00) 21.00% ...
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PROF_HARRY
School: UC Berkeley

Please find attached. Let me know if you need edits.

Outline

Introduction
Body
Conclusion
References


Running head: VALUATION AND EQUITY RESEARCH

Valuation and Equity Research
Name
Institution

1

VALUATION AND EQUITY RESEARCH
The enterprise value

The enterprise that I have chosen is Apple Inclination. Apple inclination is a
multinational technology company based in the United States of America. Apple‘s firm value is
$ 956,499million as at September 2018. Earnings before interest and tax as at September 2018
were $ 76,143 million(Jin, 2012).

The total equity value (market capitalization)

Apple Inclination Limited total equity for the quarter ended September 2018 was $
107,147 million. This is a combination of residual interest, minority interest; minority interest is
arrived at after subtracting all the liabilities. Equity in the statement of comprehensive income is
increased by increasing the owners’ investments, and it is reduced by distributing dividends to
the shareholders (Jin, 2012).

The implied share price.
The basic earnings per share for the quarter ended September 2017 were 2.08 that was the
diluted one the basic was 2.07.
Ways of valuing the firm from the scenarios above
Use of asset valuation in determining the enterprise value.
This method uses the total assets to value the firm. A sum of the fixed, current and
intangible assets is used to determine the value of the firm. The total value of Apple Inclination
as the close of the quarter September 2018 was $ 375,319 million.
Historical earnings valuation.

2

VALUATION AND EQUITY RESEARCH
Businesses need to pay off their debts within the shortest time possible to have a strong
market value. Companies that pay off their debts in shorter periods have strong market values
and improve their c...

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University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors