...Running Head: COMPANY VALUATION Company Valuation [Name of writer] [Name of institute] Company Valuation Introduction This is the case of a partnership business, Midwest Lightning Inc. (MLI) partnered between two entrepreneurs Jack Peterson and David Scott. Over the years these two partners have developed differences, which have escalated to the point of separation. Hence, in this assignment we are going to provide solution that would be required as the partnership culminates. Overview of the case The partners of the company Midwest Lightning have over the years developed differences and they are now at complete 180 degrees when it comes to their views about the business. The solution that has been suggested is that the partnership should end as the differences have become irreconcilable. In the course of separation, various issues have now arisen, regarding the valuation of the company and how much worth each partner should be accrued in the event of separation. 1) Evaluation of the company-Buy and Sell bids Allen Burke, the accountant of Jack Peterson and David Scott suggested a bid agreement. The agreement finalised was that both owners had agreed on the signing of a mutual buyout agreement. The agreement mentioned that the owners were to submit a secret bid in relation to what the other owner’s half of the business should be. The partner that would offer the maximum price would then buy out the share of other partner. A minimum...
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...On February 2, 2010 Kraft and Cadbury, two leading firms in the snack industry finalized their merger decision after five months of negotiation. In this report we will examine why it made strategic sense for the two companies to combine and evaluate the performance of the combined companies since its merger. In particular we will analyze the post-merger financial statements and highlight a few points regarding the accounting. INTRODUCTION OF KRAFT AND CADBURY Kraft Foods Inc. (KFT) is the world’s largest food processing company with revenues of $40 billion (fiscal year 2009) which sells its products in more than 150 countries. We are familiar with many of its global brands – Oreo, Philadelphia Cream Cheese, Trident, Nabisco, Maxwell House and others. Its products are biscuits, confectionary, cheese, convenient meals and packaged groceries. About half of the revenues are from international markets. Kraft Foods is an attractive investment in which Warren Buffett has a 9.4% stake. It is a truly global brand with 100,000 employees and a large market capitalization of $53 billion (Yahoo finance, Feb 13, 2011). In 2008, it replaced AIG as part of the Dow Jones Industrial Average. Cadbury plc is a British confectionary company which is now a wholly owned subsidiary of Kraft. It moved up its rank as second to largest player in the industry after the merger. Cadbury is substantially smaller than Kraft; about a fifth the size of Kraft. Yet, while still a public company and...
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...Critical Review: “The Microeconomics of Customers Relationships” Robert Morgan Capella University 03/25/2015 Unit 1 – Assessment 2 Reichheld, F. (2006). The Microeconomics of Customer Relationshops. MIT Soan Management Review, 47(2), 73. Retrieved from http://search.proquest.com.library.capella.edu/docview/224965299?accountid=27965 This review evaluates “The Microeconomics of Customers Relationships” by Fred Reichheld. The article presents a method to raise a company’s net-promoter score (NPS). The review will show that the NPS is a simplistic but valuable tool that has to be used with caution. Summary Reichheld (2006) starts his article by defining NPS and poses these five questions: “Why is the connection as strong as it is?”, “How does the quality of customer relationships affect the economics of a business?”, “Can the microeconomics of NPS itself ultimately be quantified and managed?”, and “How does a company raise its NPS — and on which customers should it focus its efforts”. In answering these questions, the author quantifies the value of the customer by giving value to word-of –mouth, retention rate, margins, annual spends, and cost efficiencies. In the second main section, Reichheld (2006) discusses how to Increase the NPS Strategically. The strategy promotes three priorities for increasing the NPS. The first priority is to invest in the company’s core customers (promoters). These customers are return customers which have a positive effect on the business...
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...figures, Royal Ahold should have taken half of what they originally included. By incorporating these new figures using US GAAP, Royal Ahold’s net income decreases drastically. In 2001, net income drops from 1,113,521,000 Euros to 119,808,000 Euros, and in 2000, from 1,115,991,000 Euros down to 793,609,000 Euros. Royal Ahold, would have lost millions of dollars no whether it decided to use Dutch or US based GAAP. They chose to follow neither countries accounting rules when creating their financials. Although they succeeded for the time being, they were eventually caught, and much work has been done to try to turn around their tarnished reputation. 2. Earnings quality refers to the overall reasonableness of reported earnings. It is an assessment criterion for how repeatable, controllable and bankable a firm's earnings are. It recognizes the fact that the economic impact of a given transaction will vary across firms as a function of their fundamental business characteristics, and has variously been defined as the degree to which earnings reflect underlying economic effects, are better estimates of cash flows, are conservative, or are predictable. Just because the net income under US GAAP yields a smaller return does not necessarily mean that the numbers are of “higher quality”. Many steps and analysis g into the creation of net...
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...Case 4-33: Cost Structure; Target Profit and Break Even Analysis Question 1: Compute Pittman Company’s break-even point in sales dollars for next year assuming: a. The agents’ commission remains unchanged at 15% $12,000,000 in sales is needed to break even while employing an outside sales force with commissions of 15% of sales. b. The agents’ commission rate is increased to 20% $13,714,286 in sales is needed to break even while employing an outside sales force with commissions of 20% of sales. c. The company employs its own sales force. $15,000,000 in sales is needed to break even while employing the company's own sales force with commissions of 7.5% of sales. Before Pittman Company’s break-even point in sales can be determined, we must initially “reformat” the provided Budgeted Income Statement for the Year Ended December 31 (for the next year) to reflect a Contribution Income Statement format. The reason for this application is to separate the Variable and Fixed costs associated in selling telecommunications equipment to derive pertinent data needed to determine break even sales. The restructuring of each Income Statement may be found in Appendix A of this report. Reformatting the Income Statement allows us to determine first, the Contribution Margin. The Contribution Margin is significant in determining Break-even point whether by the number of units to break even or the number of sales dollars needed to break-even. After determining the Contribution...
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...Rite Aid Corporation Rite Aid Corporation Outline I. Introduction A. What it means to actually invest in a company B. Rite Aid- as a publicly traded company C. General background of Rite Aid 1. turbulent times 2. transition of upper management 3. lawsuits II. A. Topic sentence for paragraph one 1. Important changes Rite Aid has implemented 2. Increase in customers and sales 3. Major store locations III. A. Topic sentence for paragraph two 1. Repentance and focusing on the customer 2. How the competitive market influences Rite Aid 3. Threats within the market 4. Partnering with outside marketing companies IV. A. Topic sentence for paragraph three 1. Improvement in revenue 2. What specific changes may contribute to increase in revenue 3. Updating the Rite Aid website V. A. Topic sentence for paragraph four 1. Getting investors to invest 2. Past behaviors vs. income 3. Shareholders reactions 4. A closer look at income statements VI. A. Conclusion 1. Effects of Rite Aid’s problems 2. Turning over a new leaf VII. A. References VIII. A. Appendices When deciding to put money into a business it takes a lot of work and research. No one wants to invest money in a company that has a bad reputation or a tendency to fall behind, so the first step is to find a business with a steady financial...
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...of the market share to competitors. The two main competitors being Lifetime and CNN. Currently TFC is mass marketing, which in the past has been fine, however, the rise in competitors has changed the dynamics of the market for TFC. Dana Wheeler must choose between three scenarios to help TFC move forward and establish itself as a big competitor in the market. Scenario 1 Involves focusing on all women ages 18-35. Would be required to serve ‘Fashionistas’, ‘Planners & Shoppers’ and ‘Situationalists’. Pros – By Targeting women aged 18-35, TFC are serving a highly valued customer audience and it is reaching a larger audience. TFC would receive a ratings boost of 20 percent from 1.0 to 1.2. This is important because without maintaining the current audience ratings it could risk losing its distribution support. Cons – Ad sales drop by 10 per cent of CPM (cost per thousand) to $1.80. This will decrease TFC’s total ad revenue per year. By focusing only on women aged 18-35, Wheeler is taking a very broad marketing segment approach because this demographic fits into all segments. If she was to choose this scenario she would be choosing a Breadth strategy by trying to reach multiple segments (Iacobucci, p.g 38, 2013). This strategy could prove detrimental to the firm because by doing so she is mass marketing and customer satisfaction, as a result, is often low. The Net Income of this scenario is $94 mill which would be more than the 2006 NI of $93 mill. However, scenario 1 is...
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... PAGE CHAPTER 1 - INTRODUCTION 5 Overview 5 History 5 Position 5 Recent Performance 6 CHAPTER 2 - ORGANIZATION 7 Organization Chart 7 Executives 8 Arlene Iniguez 8 Jorge Lozano 8 Araksya Martirosyan 9 David Portillo 9 Christopher Amador 9 CHAPTER 3 – INDUSTRY ANALYSIS 11 Sales 11 Sales Industry Average 12 Net Income 13 Net Income Industry Average 14 Return on Assets 15 Return on Assets Industry Average 16 Return on Equity 17 Return on Equity Industry Average 18 Stock Price 19 Stock Price Industry Average 19 CHAPTER 4 - OBJECTIVES 21 Weighing Factors 21 Preliminary Weighing Factors 21 Final Weighing Factors 21 CHAPTER 5 – STRATEGIES 22 Mission Statement 22 Broad Strategies 22 Marketing Strategies 22 Price 22 Advertising 22 Salary 23 Commission 23 Hiring 23 Turnover 23 Marketing Plan 24 Financial Strategies 24 Dividends 24 Certificate of Deposits 24 Debt Positions 25 Operations Strategies 25 Research and Development 25 Training 25 New Product Introduction 25 Quality Level 25 Planned Decisions for Operations and Production 25 Management 25 ...
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...QAD 4. What is QAD strategy 5. Conclusion for cloud computing in the future 1. Background QAD, a ERP software company which was founded in 1979. It is focusing on manufacturing industry. The competitors are such as SAP, Oracle, Inforsys, Epical etc. 2. The situation in ERP software area 2.1 Where is QAD’s position? The collection data metrics on selection trends, satisfaction and benefits realization are also included. So QAD software is among the tier 2 area. Which is competed with Epicor, Sage, Infor etc. 2.2 How about the pattern of competion? It is an oligopoly competition. SAP, Oracle, and Microsoft are the big three. The others are sharing about 47% marketing. QAD has about 2% sharing of the whole ERP marketing. 3. The competition of Tier II. The marketing share is so closely, each of them has their features For example: QAD –strengths • QAD has a long heritage in developing software applications to support the manufacturing sector, with a notable focus on certain manufacturing sub industries. • QAD has mainly a direct sales and implementation model in many major geographies, allowing the customer and QAD to remain in close contact throughout the Implementation • QAD Enterprise Applications is a highly flexible and scalable application that is suited for single-site and multisite operations, and can support thousands of users...
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...Andre R. Scott (D01495990) Advanced Managerial Finance – Sept 2013 - FI516 IPO Paper – Week 5 – 10/06/2013 Teacher: Miriam Benard COMPANY AND INDUSTRY Company I choose this company for two reasons; the world of information technology is huge and growing steadily. Google, Yahoo, and YouTube are hugely popular sites, and youku is a site that is similar to YouTube and delivers great possibilities for the Asian community. Youku.com, Inc. went public on December 8, 2010. This company is in the business of delivering video content over the internet. Their business model consists primarily of deriving advertising revenue as the result of viewer activity over their system. They license content and provide it for viewer use. There is no viewer fee for the service. Youku bills itself as the “leading internet television company in China.” Their mission is to become the primary source of video content for the Chinese population across any Internet-enabled device. The overall offering is somewhat like what we know as You Tube. According to iResearch, Youku has appx. 40% of the marketshare of total user time spent viewing video content online in China. Its nearest competitors have appx. 23% and 14% respectively. According to the company’s registration filing, their assessment of their strengths and opportunities is as follows: Our Competitive Strengths We believe that the following strengths contribute to our success and differentiate us from our competitors: | | ...
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...Final Project: Starting a Language School Judson University Final Project: Starting a Language School Reynosa School of English Cites and towns in Mexico bordering the U.S Mexico border have a need for low cost effective English language schools. The desire of Mexicans to learn English for better jobs and more opportunity is very high. A well-run language school, in this area would be of great service to many people, and provide a good entrepreneurial opportunity. This type of business most likely would not make the owner a rich person, but once up and running it could provide a healthy income and not be very time consuming. The product being sold would be purposeful instruction, textbooks, and use of the facility and its resources. At the end of the course the students will be prepared to take the TOEFL English exam (Test of English as a Foreign Language). There are many unregistered language school in the area, and even though they save on registration fees and a lot of paperwork, they leave themselves open to risk of closure by the government, and to lawsuits by unsatisfied customers. The Reynosa Language School will be registered as a stand-alone unaffiliated academy of language arts with S.E.P, (the Mexican national organization in charge of all schools of learning). The application fees are nominal, less than $200 us dollars, but within the application process are several services that need to be paid for. A registered architect needs to be hired to plot...
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...CVP Case Study 1: [15 marks] YOU SHOULD WORK ON THIS PART OF THE PROJECT INDIVIDUALLY. Magic Manufacturing's sales slumped badly in 2012. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 600,000 units of product: Net sales $2,400,000; total costs and expenses $2,540,000; and net loss $140,000. Costs and expenses consisted of the amounts shown below. | Total | Variable | Fixed | Cost of goods sold | $2,100,000 | $1,440,000 | $660,000 | Selling expenses | 240,000 | 72,000 | 168,000 | Administrative expenses | 200,000 | 48,000 | 152,000 | | $2,540,000 | $1,560,000 | $980,000 | | | Management is considering the following independent alternatives for 2013. | | 1. | Increase unit selling price 20% with no change in costs, expenses, and sales volume. | 2. | Change the compensation of salespersons from fixed annual salaries totaling $150,000 to total salaries of $60,000 plus a 3% commission on net sales. | 3. | Purchase new automated equipment that will change the proportion between variable and fixed cost of goods sold to 54% variable and 46% fixed. | | | Instructions (a) | Compute the break-even point in dollars for 2012. | (b) | Compute the break-even point in dollars under each of the alternative courses of action. (Round all ratios to nearest full percent.) Which course of action do you recommend? | CVP Case Study 2: [45 marks] Pittman...
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...PROBLEM 6-22B Basics of CVP Analysis; Cost Structure (LO1, LO3, LO4, LO5, LO6) CHECK FIGURE (3) Net operating loss: $50,000 (5a) Breakeven: 21,750 units Due to erratic sales of its sole product—a high-capacity battery for laptop computers—DRJ, Inc., has been experiencing difficulty for some time. The company’s contribution format income statement for the most recent month is given below: | |Sales (20,000 units × $25.00 per unit) |$500,000 | | |Less variable expenses | 300,000 | | |Contribution margin |200,000 | | |Less fixed expenses | 220,000 | | |Net operating loss |$ (20,000) | Required: 1. Compute the company’s CM ratio and its break-even point in both units and dollars. 2. The president believes that a $15,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $100,000 increase in monthly sales. If the president is right, what will be the effect on the company’s monthly net operating income or loss? (Use the incremental approach in preparing your answer.) 3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $10,000 in the monthly advertising budget, will cause unit sales to...
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...stems from a service company or a merchandising business. If you study an organization's income statement, you see things like revenues, cost of goods sold and administrative expenses -- all of which lead to net income or loss at the end of the reporting period. Income Statement When much of the economy struggles, you can look at corporation's income statement to figure out whether it's bowing to the overall negative environment or whether top leadership can maintain the business in profitable-company status. If the corporation is flourishing, you'll see that at the bottom of the statement of profit and loss -- an identical term for an income report, P&L or statement of income. Also known as the bottom line, net income equals total revenues minus total expenses. A net loss occurs if expenses exceed revenues. Service Company A service company is an organization that doesn't sell goods to make money, but rather relies on the analytical dexterity and innovation of its personnel to provide services that clients want and relish. Think of companies involved in investment banking, insurance, consulting, accounting and advisory and financial planning. In a service company's income statement, you typically see items, such as revenues, cost of services, sales and marketing and reorganization costs. You also note things like interest expense, fee income and provision for income taxes -- or income taxes, for short. Merchandising Business Merchandising consists of methods and tactics...
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...Contracting and Ethics Author: Alfred Turner Professor: Michael Hanners Strayer University 20 January 2012 Abstract This paper will discuss the GAO analysis to determine whether Aetna Government Health Plans LLC (AGHP), should be excluded from the competitive bid based on alleged unfair competitive advantage stemming from AGHP’s hiring of former TMA (TRICARE Management Activity) employee. Health Net argues that the award to AGHP has been irreparably tainted do the fact that AGHP has hired one of Health Net top level with access to inside, non public source selection information and contract proprietary information. This paper will also go into details on some of the tactics to prevent this from happening if he or she knew about this contract. I will try to identify and legal and ethical issues related to the issue. While reading this Case and carefully and thinking this out after reading the FAR. If the employee that Aetna hired from TMA (TRICARE Management Activity. There is little to nothing that the FAR states that this contract shouldn’t be awarded to Aenta. There is nothing stating that the former TRICARE employee knew anything about this RFP, therefore by law you can not exclude AGHP from the competitive bid range. Actions for TMA to take Why there appears to be little TMA can do. TMA may want to do an investigation and start by going to their former employee contract history to see was a pattern started with him and AGHP. Was he ever on the awarding...
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