Asset Valuation Essay

693 Words Oct 8th, 2012 3 Pages
Walt Disney

1. Calculate the nominal compound average annual rate of return for Walt Disney stock from the end of 1994 through the end of 2010. How well did the stockholders do?

CAGR = (Ending Value/Beg Value)^(1/#yrs) -1

2. Over the past 5 years what has been the continuously compounded nominal and real average annual growth in Disney’s Total Revenue? Disney’s most recent fiscal year‐end is 9/30/2010. Disney’s sales revenue for 2010 (9/30/2010) was $38.063 billion. Use a OLS regression for all 5 years of the data to estimate the growth rate.

Horniman Horticulture

3. What is your assessment of the financial performance of Horniman Horticulture?

While the growth in net profit has been constant, the severe decrease in cash
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Why would a company like The Body Shop want to forecast its financial statements?

Companies like The Body Shop will forecast their financial statements to get an idea of where the company is headed and begin to solve future problems before they arrive. Forecasting can also be used to estimate future cash flows in case of a merger or takeover. Financial statements are also used to attract potential shareholders if it is a public company, or show a financial position if the company is applying for an IPO.

8. Prepare a 3 year forecasts (2002‐2004. How did you prepare your forecast and what numbers did you get?

See attached. The statements were prepared by estimating an annual growth in revenue of 13% and then applying this through the statements. I estimated percentages of this revenue that would be the COGS and other expenses, assets, liabilities, etc. From there, the amounts were extended for each additional year and the retained earnings were carried into each additional year’s equity.

9. How much debt financing will The Body Shop need over this forecast period? What are the key drivers of this need, and by how much do debt needs vary as assumptions vary?

| YEAR | 2002 | 2003 | 2004 | 2005 | DEBT | (19,520) | (22,044) | (24,896) | (28,119) | |

The debt financing shown above represents a continuation of the amount of debt the company already has if they

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