Equity Asset Valuation Workbook by Jerald E. Pinto & Elaine Henry & Thomas R. Robinson & John D. Stowe

Author:Jerald E. Pinto & Elaine Henry & Thomas R. Robinson & John D. Stowe
Language: eng
Format: epub
Published: 2015-10-15T00:00:00+00:00

Questions 18–24 relate to Mark Cannan

Mark Cannan is updating research reports on two well-established consumer companies before first quarter 2011 earnings reports are released. His supervisor, Sharolyn Ritter, has asked Cannan to use market-based valuations when updating the reports.

Delite Beverage is a manufacturer and distributor of soft drinks and recently acquired a major water bottling company in order to offer a broader product line. The acquisition will have a significant impact on Delite's future results.

You Fix It is a United States retail distributor of products for home improvement, primarily for those consumers who choose to do the work themselves. The home improvement industry is cyclical; the industry was adversely affected by the recent downturn in the economy, the level of foreclosures, and slow home sales. Although sales and earnings at You Fix It weakened, same store sales are beginning to improve as consumers undertake more home improvement projects. Poor performing stores were closed, resulting in significant restructuring charges in 2010.

Before approving Cannan's work, Ritter wants to discuss the calculations and choices of ratios used in the valuation of Delite and You Fix It. The data used by Cannan in his analysis is summarized in Exhibit 1.

Delite Beverage You Fix It

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