Required DAVIDSON YACHTS COMPANY Comparative Balance Sheet For the Years Ended D

Question

Required

DAVIDSON YACHTS COMPANY Comparative Balance Sheet For the Years Ended December 31 2011 2012 2013 2014 2015 2016 Cash Accounts receivable Allowance for bad debts Inventory Other current assets S 23,260 21,966 S 18,735 S 28,426 S 43,692 S 31,264 99,46502,834 112,903 125,663 104,388 144,009 (9,304) (8,786) (8,824) 11,266 7,282 (12,506) 96,774 22,903 $160,324 $185,692 $193,630 $221,713 S218,715 S282,444 262,195282,008 299,380 368,565 405,269 498,626 (65,984) (93,442) (122,892) 158,099 187,227) 227,307) $356,535 $374,258 S370,118 S432,179 S436,757 $553,763 35,009 11,894 56,784 12,894 61,792 9,024 67,884 11,006 58,994 18,923 Total current assets Property and equipment Accumulated depreciation Total assets S 82,635 78,127 63,346 S56,256 S 40,189 S 50,544 16,132 76,962 5,279 $159,368 $150,688 $116,358 $115,656 S98,295 $148,917 158,173 72,388 179,490214,997 229,471 262,258 74,270 01,526 108,991 142,588 Total liabilities and equity $356,535 $374,258 $370,118 S432,179 S436,757 $553,763 Accounts payable Taxes payable Short-term loans Accrued payroll payable 11,630 59,876 5,227 10,983 56,980 4,598 11,780 37,583 3,649 14,083 41,093 4,224 3,738 49,594 4,774 Total current liabilities Long-term debt Equity 38,994 51,182

Explanation / Answer

The book value of equity multiple= MV of equity/ book value of equity.

To get the market value of equity we will use earnings multiple

7= price or market value of shares/ earnings

7= MV of shares/68877

MV of shares= 482139$

Book value multiple= 482139/142588= 3.38

Operating cash flow multiple = market value of shares/CFO

482139/83422= 5.78

This is above industry average which shows potential overvaluation.

The better method for valuation would be operating cash flow multiple because operating cash flow has least chances to get manipulated due to use of aggressive or conservative accounting policies, whereas book value can be altered using rigorous accounting policies.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.