Question
In: Accounting
f there are 500 million shares outstanding, use the following information to find a fair value...
f there are 500 million shares outstanding, use the following information to find a fair value for Galaxy Interiors stock using the Free Cash Flow (FCF) model.
GALAXY INTERIORS INCOME STATEMENT ($ in millions)
NET SALES $ 35,000
COST OF GOODS SOLD $ 17,500
DEPRECIATION $ 2,500
EARNINGS BEFORE INTEREST AND TAXES (EBIT) $ 15,000
INTEREST EXPENSE $ 1,300
TAXABLE INCOME (EARNINGS BEFORE TAXES; EBT) $ 13,700
TAXES (0.30) $ 4,110
NET INCOME $ 9,590
Assume the following:
• Free cash flow (FCF) will grow at 2.5%
• Galaxy's equity beta is 1.50
• Risk-free rate is 3% and market return is 13%
• Currently, Galaxy is not paying any dividends
• Book value of total debt is equal to the market value of debt
• further note that, FCF (Free cash flow) = EBIT*(1-t) + depreciation - NCS - change in NWC
approx. $125
approx. $199
approx. $375
approx. $258
|
GALAXY INTERIORS BALANCE SHEET (PAST & CURRENT) |
||||||
|
($ IN MILLIONS) |
||||||
|
PAST YR |
CURRENT YR |
PAST YR |
CURRENT YR |
|||
|
CURRENT ASSETS |
5500 |
6700 |
CURRENT LIABILITIES |
2200 |
3000 |
|
|
(NET) FIXED ASSETS |
25000 |
27000 |
LONG TERM DEBT |
9300 |
9700 |
|
|
TOTAL ASSETS |
30500 |
33700 |
TOTAL EQUITY |
19000 |
21000 |
|
|
TOTAL LIAB & EQUITY |
30500 |
33700 |
||||
Solutions
ekkarill92 answered 2 years agoRelated Solutions
If there are 500 million shares outstanding, use the following information to find a fair value...
If there are 500 million shares outstanding, use the following
information to find a fair value for Galaxy Interiors stock using
the Free Cash Flow (FCF) model.
GALAXY INTERIORS INCOME STATEMENT
($ in millions)
NET SALES
$ 35,000
COST OF GOODS SOLD
$ 17,500
DEPRECIATION
$ 2,500
EARNINGS BEFORE INTEREST AND TAXES (EBIT)
$ 15,000
INTEREST EXPENSE
$ 1,300
TAXABLE INCOME (EARNINGS BEFORE TAXES; EBT)
$ 13,700
TAXES (0.30)
$ 4,110
NET INCOME
$ 9,590
GALAXY INTERIORS BALANCE SHEET (PAST &
CURRENT)
($ IN MILLIONS)
PAST YR
CURRENT...
If there are 500 million shares outstanding, use the following information to find a fair value...
If there are 500 million shares outstanding, use the following
information to find a fair value for Galaxy Interiors stock using
the Free Cash Flow (FCF) model.
GALAXY INTERIORS INCOME STATEMENT ($ in millions)
NET SALES $ 35,000
COST OF GOODS SOLD $ 17,500
DEPRECIATION $ 2,500
EARNINGS BEFORE INTEREST AND TAXES (EBIT) $ 15,000
INTEREST EXPENSE $ 1,300
TAXABLE INCOME (EARNINGS BEFORE TAXES; EBT) $ 13,700
TAXES (0.30) $ 4,110
NET INCOME $ 9,590
Assume the following:
• Free...
If there are 500 million shares outstanding, use the following information to find a fair value...
If there are 500 million shares outstanding, use the following
information to find a fair value for Galaxy Interiors stock using
the Free Cash Flow (FCF) model.
GALAXY INTERIORS INCOME STATEMENT
($ in millions)
NET SALES
$ 35,000
COST OF GOODS SOLD
$ 17,500
DEPRECIATION
$ 2,500
EARNINGS BEFORE INTEREST AND TAXES (EBIT)
$ 15,000
INTEREST EXPENSE
$ 1,300
TAXABLE INCOME (EARNINGS BEFORE TAXES; EBT)
$ 13,700
TAXES (0.30)
$ 4,110
NET INCOME
$ 9,590
GALAXY INTERIORS BALANCE SHEET (PAST &
CURRENT)
($ IN MILLIONS)
PAST YR
CURRENT...
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