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Compute the expected net income

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Question - Based on the latest analyst estimates, Cucumbers United will achieve sales of $215.2m against COGS of $135.6m this year. Depreciation expenses and capital expenses are scheduled to be $15.8m and $11.4m, respectively. The tax rate is projected to be 31.0 percent.

The company pays an average 3.10 percent in interest per year on its $300m of outstanding debt and has a cash balance of $80m.

a) Compute the expected net income (in million).

b) Compute the expected EBITDA (in million).

c) Compute the expected free cash flow to the firm (in million).

d) Compute the expected free cash flow to equity (in million)

On average, peer firms are valued at 13.5 time earnings, 13.0 time EBITDA, have an price to sales ratio of 4.0, and have FCFE-multiples of 17.0 and FCFF-multiples of 16.1, respectively.

e) What does a valuation by multiples based on earnings imply for the firm's market capitalization (in million)?

f) What does a valuation by multiples based on EBITDA imply for the firm's market capitalization (in million)?

g) What does a valuation by multiples based on sales imply for the firm's market capitalization (in million)?

h) What does a valuation by multiples based on FCFE imply for the firm's market capitalization (in million)?

i) What does a valuation by multiples based on FCFF imply for the firm's market capitalization (in million)?

Reference no: EM132956156

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