Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. assuming each of the precedent transaction compani

Assuming each of the precedent transaction companies was able to achieve 50% of the expected...

90.2K

Verified Solution

Question

Finance

Assuming each of the precedent transaction companies was able to achieve 50% of the expected synergies in 2020 (and that these synergies were not reflected on the 2020FY income statement), re-calculate the Enterprise Value multiple for both Big Lumber and Lumberjack. (Show all work)image

($millions) Big Lumber Co. Lumberjack Inc. Balance Sheet: Cash & Cash Equivalents $ 20.0 $ 25.0 Current Assets 85.0 110.0 PP&E 242.0 265.5 Current Liabilities 70.3 81.6 C Debt 100.0 130.0 Preferred equity 44.0 50.0 t Common equity 88.0 95.0 Income Statement: Net Revenue 225.0 250.0 Cost of Goods Sold* 135.0 150.00 Restructuring Charge 10.0 0.0 Asset Write-down 0.0 5.0 e Operating income 80.0 95.0 Interest expense 4.2 6.12 Other expense 3.0 2.5 Taxes (38%) 27.7 32.82 Net income 45.1 53.6 * Assume depreciation expense represents 10% of Cost of Goods Sold. + Note: The expected annual synergies for Big Lumber and Lumberjack are $4.0 million and $5.0 million, respectively

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students