Harley-Davidson Inc. produces motorcycles, motorcycle parts and related accessor

Question

Harley-Davidson Inc. produces motorcycles, motorcycle parts and related accessories and merchandise in the United States and internationally. It is headquartered in Milwaukee, Wisconsin.

Use the following information on Harley-Davidson and five other similar companies to value Harley-Davidson as of December 31, 2004.(answer in billions. round to 1 decimal)

Harley-Davidson Inc. 2004 ($ millions) Price/earnings (x) Net income $     889.77 Arctic Cat 16.9 Number of common shares, millions        294.31 Brunswick 17.8 Earnings before interest and tax $ 1,506.16 Polaris Industries 27.8 Tax rate 35.0% Marine Products 28.6 Book value of equity $ 3,218.47 Winnebago Industries 18.6 Book value interest-bearing debt $ 1,295.44 Total Sales $ 5,320.45 Total Assets $ 5,483.29

Explanation / Answer

Solution:

Calculation of the Value of the Value of Harley-Davidson as of December 31, 2004:

Estimated indicators of value for Harley-Davidson Inc:

The implied value of HOG common stock per share for each indicator of value is:

Price/earnings 23.0 X MV firm/EBIT(1 - tax rate) 23.0 X MV equity/BV equity 5.6 X MV firm/BV firm 5.0 X Price/sales (x) 3.0 X MV firm/sales (x) 3.0 X

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

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