Introduction Boston Chicken is a traditional American success story and a stellar representation of the new economy. Founded in 1989 by Scott Beck, the idea was to franchise restaurants that featured home style rotisserie-cooked chicken at affordable prices. While the actual food offerings were nothing new, the market winning formula for picking real estate, designing stores, organizing franchise operations and analyzing data was nothing short of a breakthrough. Due to an innovative competitive
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address the following key questions regarding Boston Beer Company (BBC) to explore the issues surrounding its Initial Public Offering. First of all, we determine the fair value of BBC to be $211 million based on a DCF valuation of projected future cash flows and explain our key assumptions and potential problems arising from those assumptions. Second, we find BBC’s fair value to be $314 million by relative valuation and discuss how differences in operating strategies might translate into differences
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relative valuation. 2. Literature review 2.1 Definition of multiple A valuation multiple is simply an expression of market value relative to a key statistic that is assumed to relate to that value. To be useful, that statistic – hether earnings, cash flow or some other measure – must bear a logical relationship to the market value observed; to be
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several available techniques As discussed, investment related demand will be driven by expected return resulting from demand of other similar opportunities available, potential to generate cash and implied risk. When determining whether expected return can be achieved, one way is to estimate the cash generated from the „Asset‟ against what is invested after considering „Time Value of Money‟ (a.k.a. Net Present Value) … the other way is to find out what are other „similar‟ opportunities
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& Valuation Woodward Research, using a discounted cash flow (DCF) analysis, values Airways at an enterprise value of $140.5 million. Airways has net debt of $22.1 million. This values Airways’ equity at $118.3 million. Woodward Research has also valued Airways using valuation metrics drawn from a group of comparable companies. Using enterprise value to EBITDA (EV/EBITDA) metrics gives an enterprise value of $176.7 million. Because its revenues and cash flows are fairly predictable, and that there
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Cases in Healthcare Finance Case 16 Solution Case 16 - 1 CASE 16 SOLUTION (11/17/10) Copyright 2010 by FACHE SOUTHERN HOMECARE Cost of Capital Case Information Type This case is nondirected, in that it does not contain a specific list of questions that students must answer. Rather, the case contains general guidance or concerns expressed by various parties that students should consider when developing their solutions. If you, as the instructor, want to convert this case to a directed
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12/9/2012 Chapter 9 The Time Value of Money 1 Chapter 9- Learning Objectives Identify various types of cash flow patterns (streams) that are observed in business. Compute (a) the future values and (b) the present values of different cash flow streams, and explain the results. Compute (a) the return (interest rate) on an investment (loan) and (b) how long it takes to reach a financial goal. Explain the difference between the Annual Percentage Rate (APR) and the Effective Annual Rate
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partners to reduce assets and thus, it can increase ROA and thereby increase potential profitability. Invest in projects that increase shareholders’ value: the discounted cash flow techniques to evaluate potential investments allow the company to invest only in profitable projects. Therefore, it can maximize the use of its cash flow to gain profits. Optimize the use of debt in the capital structure: because firms with lower percentage of debt have higher value, Marriott uses this strategy
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feature at a various cost by the identical vendor, or two or more various buyers that utilizes expenditure to resale to the United States, that argue in cutthroat damage. (Smith, 2004) There are some determined drawbacks on the usually applied discounted cash flow (DCF) process with the price increases that results of dishonest actions in extended live assignments with extreme hazard modifications, which the hazard will weaken later on the stage of the assignment.
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1. What changes, if any, should Lucy Morris ask Frank Greystock to make in his discounted cash flow (DCF) analysis? Why? What should Morris be prepared to say to the Transport Division, Director of Sales, her assistant plant manager and the analyst from the Treasury Staff? • In DCF analysis if Merseyside Project done by Greystock, inflation rate is assumed to be 0%, which is not the case in practice. Treasury staff showed concerns that long-term inflation should be 3%. • Since preliminary engineering
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