prepare an Excel file and a 3-4 page Equity Research Update

Anonymous
timer Asked: Nov 17th, 2018
account_balance_wallet $20

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 everything. I want report beads on outline

Unformatted Attachment Preview

Assumption (Red Roibn) Hist. Hist. 2015 2016 Income Statement Assumptions Sales growth - % Cost of sales - % of sales - excl depreciation Selling and administrative expense - % sales - excl amortization Depreciation % of beginning net PP&E Income taxes - % income before taxes Basic WASO Diluted WASO Interest income - % return on cash & equivalents Interest expense - % rate paid on long-term debt Nonoperating income, net - $ Pre-opening and acquisition costs $ 76.3% 11.7% 3.09% 78.1% 10.6% 24.56% -144.88% 14 13 14 13 4.3% 2.15% 0.7 37.4 7.0 7.3 Balance Sheet Assumptions Accounts receivable, net - % sales Inventories - % COGS Prepaids and other current assets - % sales CapEx - % sales Goodwill - $ Other long-term assets Inv & advances affiliates Accounts payable - % COGS Accrued liabilities - % COGS Long-term debt (inc. current portion) - $ repayment from debt note Long term income taxes Deferred income taxes - $ Liabilities held for sale Other Current Liabilities rethink Other long term liabilities - % sales Common stock - $ Additional paid in capital - $ Treasury stock - $ Accum other income - $ 1.9% 13.2% 2.0% 2.95% 2.09% 12.6% 95.9 42.3 2.63% 5.28% 10.8 72.4 50.199 10.723 0.76% 0.0180 208.0 -207.7 -5.0 Hist. Proj Proj Proj Proj Proj 2017 2018 2019 2020 2021 2022 6.52% 78.7% 10.9% 14.10% -3.44% 13 13 5.32% 4.13% 6.9 5.6 -1% 78.6% 10.9% 15.0% 20.00% 11 12 -3% 5% 7 4 -1% 78.4% 10.9% 15.0% 20.00% 14 12 -3% 5% 7 4 1% 78.4% 10.9% 15.0% 20.00% 14 12 -3% 5% 7 4 1% 78.4% 10.9% 15.0% 20.00% 14 12 -3% 5% 7 4 3% 78.5% 10.9% 15.0% 20.00% 14 12 -3% 5% 7 4 Key Words From Revenue Build the cost of sales will keep increasing in future I think the sales will just remain constant in the future u The acquisition of new assets means that there will high it will remain decreasing in future for a certain period th The increase in net income means growth in the returns this assumption,it will remain constant. The decline in interest income -5.32% of cash and cash e The interest expense will increase to 5% due to the addi It will remain constant It will remain constant 1.5% 2.72% 2.25% 6.0% 97.0 1.50% 2.72% 2.20% 7% 97.0 1.50% 2.72% 2.20% 6% 97.0 1.50% 2.72% 2.20% 6% 97.0 1.50% 2.72% 2.20% 6% 97.0 1.50% 2.72% 2.20% 7% 97.0 Remain constant due to improved efficiency Remain constant due to improved capacity to sell more It will remain constant Reduce to 5% from 6% due to reduction in acquisitions it will remain constant in future. 38.3 3.25% 5.39% 38.3 38.3 38.3 38.3 38.3 4% 4% 4% 4% 4% 4% 4% 4% 10.2 75.0 55.915 10.5 10.2 75 55.915 10.5 10.2 75 55.915 10.5 10.2 75 55.915 10.5 10.2 75 55.915 10.5 It will remain constant 4% Increase due to purchase of more stocks on credit 4% Decline due to the repayment of most of the outstandin 10.2 75 55.915 10.5 Remain constant due to the low revenue growth of 1% a Remain constant due to the low revenue growth of 1% a It will remain constant It will remain constant 0.82% 0.82% 0.82% 0.82% 0.82% 0.82% It will remain constant 0.0180 0.00000 0.00000 0.00000 0.00000 0.00000 No changes due to lack of common stock in the compan 210.70800 210.7 210.7 210.7 210.7 210.7 It will remain constant ######## ######## ######## ######## ######## ######## It will remain constant in future -3.6 -3.6 -3.6 -3.6 -3.6 -3.6 it will remain constant in future Words eep increasing in future st remain constant in the future unless the sales expands assets means that there will high depreciation ng in future for a certain period then it will increase ome means growth in the returns to shareholders remain constant. income -5.32% of cash and cash equivalents is an indicatio of low returns from investments will increase to 5% due to the additional debts o improved efficiency o improved capacity to sell more stock from the additional stores due to reduction in acquisitions in future. ase of more stocks on credit ayment of most of the outstanding liabilities o the low revenue growth of 1% and 2% o the low revenue growth of 1% and 2% k of common stock in the company in future in future Red Robin Hist. Hist. Hist. Hist. Hist. Income statement 2013 2014 2015 2016 2017 Company Restaurants Revenues growth rate 1,017.2 1,146.1 1,257.6 1,296.4 1,380.9 Total Revenues growth rate 12.7% 1,017.2 1,146.1 12.7% 9.7% 3.1% 1,257.6 1,296.4 9.7% 3.1% 6.5% 1,380.9 6.5% Select a revenue growth scenario 3 Overall growth rate used in forecast 1 Base case 2 Upside case 3 Downside case Forecast revenue stores growth rate in store Total Revenues revenues per stores 538 540 0.37% 560 3.70% 1,257.6 1,296.4 1,380.9 233.75% 240.07% 246.59% Proj. Proj. 2018 2019 1,353.3 -2.0% 1,353.3 1,339.7 -1.0% 1,339.7 -2.0% -1.0% -1.0% -0.5% 1.0% -1.0% -0.5% 0.5% 2.0% -0.5% 588 5.0% 619 5.2% 1,807.6 30.90% 2,313.7 28.00% Proj. Proj. Proj. 2020 2021 2022 1,339.7 0.0% 1,339.7 1,366.5 2.0% 1,366.5 1,393.9 2.0% 1,393.9 0.0% 2.0% 2.0% 1.0% 1.0% 3.0% 1.0% 1.0% 2.0% 3.0% 1.0% 3.0% 2.0% 3.0% 2.0% 653 5.6% 690 5.7% 731 5.9% 2,822.7 22.00% 3,387.3 20.00% 4,064.8 20.00% Red Robin Hist. Income statement 2015 Revenues Cost of sales - excluding D&A on PP&E 1257.6 958.9 Gross profit 298.7 Selling, general, and administrative Pre-opening and acquisition costs Depreciation and amortization Other Operating Expense/(Income) 146.7 7.0 77.4 0.0 Operating profit as reported 67.6 EBIT EBITDA Interest income Interest expense Nonoperating income(expense) 67.6 145.0 0.0 3.7 0.7 Income before taxes 63.2 Income taxes 15.5 Net income 47.7 Dividends 0 Net earnings per share Basic WASO Diluted WASO Basic earnings per common share Diluted earnings per common share 14.04 14.22 3.40 3.36 Hist. Hist. Proj Proj Proj Proj Proj 2016 2017 2018 2019 2020 2021 2022 1296.4 1012.6 1380.9 1086.8 283.8 294.1 137.9 7.3 86.7 3.0 150.0 5.6 92.5 0.0 48.9 45.9 44.3 46.3 49.9 53.1 57.4 48.9 135.6 45.9 138.5 44.3 140.0 46.3 142.0 49.9 143.5 53.1 145.0 57.4 148.0 0.5 7.2 37.4 0.9 11.0 6.9 - 0.53 10.7 4.8 29.0 26.1 -6.9 -1.0 11.7 30.0 0 13.33 13.46 1367.1 ######## 292.6 293.8 148.5 4 95.72 - 1.41 10.7 0 13 2.33 2.31 149.3 4 93.60 7 5.23 1387.6 1,087.9 299.7 - 2.48 10.7 27.3 20.9 1373.9 1,077.1 296.8 147.8 4 95.72 7 12.90 0.88 0.87 1360.3 1,066.5 5.45 21.8 3.53 10.7 7 29.8 307.3 150.7 4 91.93 - 155.3 4 90.63 - 4.55 0.0 7 31.9 5.95 23.8 1429.3 1,122.0 7 45.8 6.37 25.5 9.17 36.7 0 0 0 0 0 11 12 1.90 1.74 14 12 1.55 1.82 14 12 1.70 1.98 14 12 1.82 2.12 14 12 2.61 3.06 Red Robin Hist. Hist. Balance sheet 2016 2017 Cash & equivalents Accounts receivable, net Inventories Prepaids and other current assets Assets held for sale 11.7 24.2 29.9 27.0 17.7 26.5 29.6 31.0 Total current assets 92.8 104.8 Net P,P&E Other Intangibles Goodwill Other long-term assets 656.4 42.3 95.9 31.1 638.2 38.3 97.0 32.4 Total non-current assets 825.7 805.8 TOTAL ASSETS 918.5 910.6 0.0 26.6 53.5 50.2 10.7 0.0 35.3 58.6 55.9 10.5 141.0 160.4 336.4 72.4 10.8 9.9 266.4 75.0 10.2 11.3 Total non-current liabilities 429.5 362.8 Total liabilities 570.5 523.2 Common stock Additional paid in capital Retained earnings Treasury stock Accum other income 0.0180 208.0 352.7 -207.7 -5.0 0.0180 210.7 382.8 -202.5 -3.6 Total equity 348.1 387.4 TOTAL LIABILITIES & EQUITY 918.5 910.6 Assets Liabilities & Equity A A Financing gap Accounts payable Accrued liabilities Liabilities held for sale Other Current Liabilities Total current liabilities Long-term debt (inc. current portion) Deferred income taxes Long term income taxes Other long term liabilities Does balance sheet balance? 0.0 0.0 Proj Proj Proj Proj Proj 2018 2019 2020 2021 2022 46.9 20.5 29.2 30.1 126.7 638.1 29.2 97.0 32.4 82.8 20.4 29.0 29.9 162.1 624.0 29.0 97.0 32.4 117.7 20.6 29.3 30.2 197.8 612.9 29.3 97.0 32.4 151.7 20.8 29.6 30.5 232.6 604.2 29.6 97.0 32.4 178.6 21.4 30.5 31.4 262.0 613.6 30.5 97.0 32.4 796.7 782.4 771.5 763.2 773.5 923.5 944.6 969.3 995.8 1035.5 0 43.0 43.0 55.9 10.5 152.4 266.4 75 10.2 11.18 0 42.7 42.7 55.9 10.5 151.7 266.4 75 10.2 11.12 0 43.1 43.1 55.9 10.5 152.6 266.4 75 10.2 11.23 0 43.5 43.5 55.9 10.5 153.4 266.4 75 10.2 11.34 0 44.9 44.9 55.9 10.5 156.2 266.4 75 10.2 11.68 362.8 362.7 362.8 362.9 363.3 515.1 514.4 515.4 516.4 519.4 0.0000 210.7 403.7 -202.5 -3.6 0.0000 210.7 425.5 -202.5 -3.6 0.0000 210.7 449.3 -202.5 -3.6 0.0000 210.7 474.8 -202.5 -3.6 0.0000 210.7 511.5 -202.5 -3.6 408.3 430.1 453.9 479.4 516.1 923.5 944.6 969.3 995.8 1035.5 0.0 0.0 0.0 0.0 0.0 Red Robin Hist. Hist. Proj Proj Proj Proj Cash Flow 2015 2017 2018 2019 2020 2021 Cash Flow statement Net income Depreciation 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 Other Current Liabilities Operating cash flows 20.91 21.81 95.72 95.72 5.99 0.10 0.33 0.22 0.961366 0.150383 0 0 7.64 (0.32) (15.62) (0.32) 0 0 0.02 0 0.003 0 -0.11 -0.06 0.00 0.00 115.84 117.30 CAPEX Other Intangibles 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 Cash - beg Change in cash Cash - end -81.62 0.22 0 -81.40 -82.43 (0.29) 0 -82.72 -83.26 (0.29) 0 -83.55 - - - - 29.18 17.714 25.49 91.93 -0.21 (0.29) -0.30226 0 0.43 0.43 0 0 0 0.11 0.00 117.59 -95.70 9.05 0 -86.65 0 0 0 0 0 Change in cash 23.81 93.60 -0.20 (0.29) -0.29926 0 0.43 0.43 0 0 0 0.11 0.00 117.58 0 0 0 0 0 35.90 0 0 0 0 0 - 0 0 0 0 0 - 34.86 34.04 17.714 46.89818 82.80134 29.18 35.90 34.86 46.90 82.80 117.66 117.663 34.04 151.71 Proj 2022 36.67 90.63 -0.62 (0.93) -0.91583 0 1.36 1.36 0 0 0 0.34 0.00 127.90 -100.05 (0.93) 0 -100.97 0 0 0 0 0 26.93 151.7074 26.93 178.63 Red Robin Hist. Hist. Hist. Calculations 2015 2016 2017 PP&E PP&E - beg CAPEX Depreciation PP&E - end 166.28 163.77 83.53 638.151 Other long term assets - beg Additions to other long term assets Amortization Other long term assets - end 32.408 Reconciliation of RE RE - beg Net income Dividends RE - end 382.76 Proj Proj Proj Proj Proj 2018 2019 2020 2021 2022 638.151 638.1267 624.0248 612.8543 604.1837 95.70 81.62 82.43 83.26 100.05 95.72 95.72 93.60 91.93 90.63 638.13 624.02 612.85 604.18 613.60 32.408 0 32.408 0 32.408 0 32.408 0 32.408 0 32.41 32.41 32.41 32.41 32.41 382.76 403.6686 425.4799 449.2902 474.7843 20.91 21.81 23.81 25.49 36.67 0 0 0 0 0 403.6686 425.4799 449.2902 474.7843 511.458 Red Robin Hist. Hist. Hist. Proj Debt 2015 2016 2017 2018 Revolver Ending balance Interest rate on debt Interest expense - use beginning balance 0 0 4.00% 0 Long term debt Beginning balance Repayment Ending balance 266.375 266.375 0 266.375 Interest rate on debt Interest expense - use beginning balance 4.00% 10.655 Total interest expense - using beginning balance 10.655 Proj Proj Proj Proj 2019 2020 2021 2022 0 4.00% 0 0 4.00% 0 0 4.00% 0 0 4.00% 0 266.375 0 266.375 266.375 0 266.375 266.375 0 266.375 266.375 0 266.375 4.00% 10.655 4.00% 10.655 4.00% 10.655 4.00% 10.655 10.655 10.655 10.655 10.655 Red Robin Hist. Hist. Hist. Summary 2015 2016 2017 Ratio Growth Sales growth Sales CAGR 2015 - 2017 EBITDA growth Net income growth 3.1% 6.5% -6.5% -75.4% 2.1% 156.0% 3.8% 3.8% 10.5% 0.9% 3.4% 3.3% 3.3% 10.0% 2.2% 7.7% 3.2% Profitability Operating margin EBIT margin EBITDA margin Net income margin Return on equity - ROE total 5.4% 5.4% 11.5% 3.8% Leverage & Coverage Net debt Gross debt / EBITDA EBITDA / interest expense 39.40 324.64 2.48 18.73 248.66 1.92 12.59 Asset management Receivable days Inventory days Payable days Cash conversion cycle OWC OWC to sales Net PPE /Sales CAPEX/Sales CAPEX/Depreciation Gross PP&E Accumulated depreciation Accumulated depreciation/Gross PP&E 6.80 7.00 10.78 9.92 9.59 11.87 7.99 5.06 (9.70) (17.36) -0.7% -1.3% 0.506 0.462 0.132221 0.12632276 0.060488 2.149042 1.88903628 0.902588 1,228.9 1,278.3 (572.5) (640.1) 656.4 638.2 Free cash flow EBIT Tax rate NOPAT D&A CAPEX New investment OWC FCF 67.63 24.6% 51.02 146.66 166.28 48.92 -144.9% 119.79 137.89 163.77 363.95 421.45 45.95 -3.4% 47.53 150.02 83.53 7.66 288.74 Proj Proj Proj Proj Proj 2018 2019 2020 2021 2022 -1.0% -0.5% 1.0% 1.0% 3.0% 1.1% -30.3% 1.4% 4.3% 1.0% 9.2% 1.0% 7.1% 2.1% 43.9% 3.2% 3.2% 10.2% 1.5% 5.1% 3.4% 3.4% 10.4% 1.6% 5.1% 3.6% 3.6% 10.4% 1.7% 5.2% 3.8% 3.8% 10.4% 1.8% 5.3% 4.0% 4.0% 10.4% 2.6% 7.1% 219.48 1.90 13.14 183.57 1.88 13.33 148.71 1.86 13.47 114.67 1.84 13.61 87.74 1.80 #DIV/0! 5.48 5.48 5.48 5.48 5.48 9.93 9.93 9.93 9.93 9.93 14.60 14.60 14.60 14.60 14.60 0.80 0.80 0.80 0.80 0.80 (16.65) (16.48) (16.54) (16.60) (16.86) -1.2% -1.2% -1.2% -1.2% -1.2% 0.467 0.459 0.446 0.435 0.429 0.07 0.06 0.06 0.06 0.07 0.999746 0.852673 0.880662 0.905681 1.103945 1,278.3 1,278.3 1,278.3 1,278.3 1,278.3 (640.1) (640.1) (640.1) (640.1) (640.1) 638.2 638.2 638.2 638.2 638.2 44.32 20.0% 35.46 148.52 95.70 -0.70 278.97 46.33 20.0% 37.06 147.78 81.62 -0.17 266.28 49.90 20.0% 39.92 149.25 82.43 0.06 271.67 53.05 20.0% 42.44 150.75 83.26 0.06 276.51 57.39 20.0% 45.91 155.27 100.05 0.26 301.49 Red Robin Hist. Proj Proj Summary 2017 2018 2019 44.3 95.7 -0.79 -95.70 20.00% 46.3 95.7 -0.23 -81.62 20.00% Inputs growth scenario Downside case 45.9 92.5 EBIT Depreciation & amortization 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) 2.5% 5.31% 17.714 276.572 12.998 8.95 BASIC APPROACHES THAT USE ONLY NEXT YEAR'S FORECAST A: Enterprise Valuation: Relative Valuation using Trailing EBITDA Multiple EBITDA EV Equity value Share price 138 1,239.03 980 $75.41 B: Enterprise Valuation Assuming Constant Growth FCF EV Equity value Share price 34.69 1,235 976 $75.12 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) Free cash flow Present value of FCF 1 2 34.69 50.93 33 46 TV using EBITDA multiple PV of TV 1,023 Enterprise value Equity value Share price 1,216 957 $73.61 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 1,045 Enterprise value Equity value Share price 1,238 980 $75.37 E: Enterprise Valuation Assuming Non-Constant Growth and Finite Time Horizon Free Cash Flow Valuation of an Enterprise under a 60 Year Time Horizon Inputs Year Free cash flow FCF growth rate expected Calculations Year (for discounting) Free Cash Flow PV of FCF 2018 35 Equity value Share price 51 46.8% Output Enterprise Value for 60 year time horizon 2019 924 665 $51.14 1 2 35 51 33 46 Proj Proj Proj 2020 2021 2022 49.9 93.6 0.17 -82.43 20.00% 53.1 91.9 0.17 -83.26 20.00% 57.4 90.6 0.60 -100.05 20.00% Chuy's Holdings, Inc Fiesta Restaurant Group, Inc Dave & Buster's Entertainment, Inc Avrage nt Growth over short term;TV is based off EBITDA Multiple 3 4 5 6 51.26 51.29 37.09 38 44 42 29 $73.61 6 8.95 6.31% 5.81% 5.31% 4.81% 4.31% 1,324 44.85 46.25 47.69 49.17 50.69 44.85 46.25 47.69 49.17 50.69 nt Growth over short term;TV assumes we hit steady state and can apply constant growth model 38.0 $75.37 6.31% 5.81% 5.31% 4.81% 4.31% 1,353.9 2% 44.27 52.34 62.84 77.05 97.40 2.5% 44.27 52.34 62.84 77.05 97.40 ime Horizon 2020 2021 51 0.6% 2022 51 0.0% 2023 37 -27.7% 2024 38 2.0% 2025 39 2.0% 2026 39 2.0% 40 2.0% 3 4 5 6 7 8 9 51 51 37 38 39 39 40 44 42 29 28 27 26 25 9.64 8.25 8.95 8.946667 8 61.63 63.43 65.28 67.18 69.14 t growth model 3% 59.93 73.61 93.18 123.55 177.06 2027 2028 41 2.0% 2029 42 2.00% 2030 43 2.00% 2031 43 2.00% 2032 44 2.00% 2033 45 2.00% 46 2.00% 10 11 12 13 14 15 16 41 42 43 43 44 45 46 24 24 23 22 21 21 20 2034 2035 47 2.00% 2036 48 2.00% 2037 49 2.00% 2038 50 2.00% 2039 51 2.00% 2040 52 2.00% 2041 53 2.00% 2042 54 2.00% 55 2.00% 17 18 19 20 21 22 23 24 25 47 48 49 50 51 52 53 54 55 20 19 18 18 17 17 16 16 15 2043 2044 56 2.00% 2045 57 2.00% 2046 58 2.00% 2047 60 2.00% 2048 61 2.00% 2049 62 2.00% 2050 63 2.00% 2051 65 2.00% 66 2.00% 26 27 28 29 30 31 32 33 34 56 57 58 60 61 62 63 65 66 15 14 14 13 13 12 12 12 11 2052 2053 67 2.00% 2054 69 2.00% 2055 70 2.00% 2056 71 2.00% 2057 73 2.00% 2058 74 2.00% 2059 76 2.00% 2060 77 2.00% 79 2.00% 35 36 37 38 39 40 41 42 43 67 69 70 71 73 74 76 77 79 11 11 10 10 10 9 9 9 9 2061 2062 80 2.00% 2063 82 2.00% 2064 84 2.00% 2065 85 2.00% 2066 87 2.00% 2067 89 2.00% 2068 90 2.00% 2069 92 2.00% 94 2.00% 44 45 46 47 48 49 50 51 52 80 82 84 85 87 89 90 92 94 8 8 8 7 7 7 7 7 6 2070 2071 96 2.00% 2072 98 2.00% 2073 100 2.00% 2074 102 2.00% 2075 104 2.00% 2076 106 2.00% 2077 108 2.00% 110 2.00% 53 54 55 56 57 58 59 60 96 98 100 102 104 106 108 110 6 6 6 6 5 5 5 5 Red Robin 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 276.57 33.61 12.98 436.26 712.83 38.8% 61.2% 3.0% 0.2% 3.2% 5.5% 0.65 6.8% 5.31% ...
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Tutor Answer

proffesomathe
School: UIUC

Attached.

Running Head: EQUITY RESEARCH

1

EQUITY RESEARCH
Name:
Institution Affiliation:

EQUITY RESEARCH

2

Equity Research
The primary purpose of conducting an equity research is to ensure that there is significant
analysis of the company’s financials and thus determining the position of the company about the
finances. This further enhances decision making for many firms especially with regards the
effective ways in which the firm can allocate its resources. The equity research process further
enhances the decisions by investors to ensure that they are capable of accessing the financial
information that is required to make effective decisions on their investment options.
Enterprise Value
Enterprise value relates to the total value of the company. This means that, it is allinclusive which looks at the entire market value rather than the equity value. In this case the total
debts of the company, has an ending balance of 266.375. This signifies the outstanding debts of
the company. Furthermore, the cash of the company is valued at 46.90 as of year 2018. Market
ca...

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