Reference no: EM13483527
You have been assigned to address the issues found below. The information that you provide will be used by the decision makers to determine a price per share for the stock. For the computations use the information found on the Yahoo! Finance web pages for Tiffany & Co. (TIF). It also will be helpful to review Tiffany & Co.'s annual report.The numbers used would be for the financials of January 31, 2011 and January 31, 2010. Other computations which require more current information will be found on these webpages as well.
For discussion questions a good source of information is found in the company's Annual Report for 2010. The link to the Company's official web site can be found at the bottom of the Profile page for Tiffany & Co. on Yahoo! Finance.
a) Discuss Tiffany & Co. in the context of the forces considered in performing an environmental scan.
b) Discuss the risks that Tiffany & Co. needs to consider in conducting its operations.
c) Explain whether you believe that the company can take on more debt. Use some computations to support your conclusion.
d) Compare Tiffany & Co.'s inventory holding period to Macy's Inc. (M) and Saks Incorporated (SKS). Discuss results.
e) Construct the DuPont Identity for TIF, M, SKS. Explain your results.
f) Determine the MVA for TIF, M, and SKS and discuss the results.
g) Determine the EVA for TIF, M, and SKS and discuss the results. Use long term debt plus stockholders' equity for investor supplied capital. Assume that the cost of capital is eight percent for all three companies. The tax rate for all three companies is 30 percent. Comment on the results.
h) Determine TIF's free cash flow for 2010. Comment on the results and the importance of free cash flow.