Explain what are two critical operating assumptions

Reference no: EM13284830

You are valuing DistressCo, a company struggling to hold market share. The company currently generates $120 million in revenue, but its revenue is expected to shrink to $100 million next year. Cost of sales currently equals $90 million and depreciation equals $18 million. Working capital equals $26 million and equipment equals $120 million. Using this data, construct operating profit and invested capital for the current year. You decide to build an as-is valuation of DistressCo. To do this, you forecast each ratio (such as cost of sales revenues) at its current level. Based on this forecast method, what are operating profits and invested cpital expected to be next year? What are two critical operating assumptions (identify one for profits, and one for capital) embedded in this forecast method?

Reference no: EM13284830

Questions Cloud

What is the change in voltage from a voltage range : A certain sine wave has a frequecny of 2.2kHz and an rms value of 25 V. Assuming a given cycle begins (zero crossing) at t=o s, what is the change in voltage from 0.12 ms to 0.20 ms

History of the corrections system-corrections by era : A history of the corrections system and varying approaches to corrections by era. A complete description of the participants of the corrections system and their roles. A detailed analysis of the impediments, or issues, faced by corrections administra..

What should be the potential inside the electrode : Equipotentials between two parallel lines with a floating circular electrode: I dont need to know the exact potentials, What should be the potential inside the electrode

How far will the stone compress the spring : A 10.0kg stone slides down a snow-covered hill (the figure (Figure 1) ), leaving point A with a speed of 10.0m/s. How far will the stone compress the spring

Explain what are two critical operating assumptions : What are operating profits and invested cpital expected to be next year? What are two critical operating assumptions (identify one for profits, and one for capital) embedded in this forecast method?

At what negative time does the particle pass through origin : The position function x(t) of a particle moving along an x axis is x = 4.0 - 4.5t2, with x in meters and t in seconds. At what negative time does the particle pass through the origin

What is the maximum safe speed forthe turn : As you travel every day to campus, the road makes a large turn thatis approximately an arc of a circle. What is the maximum safe speed forthe turn when the road is wet

Consider a simple three-step manufacturing process : Assuming that demand is 1,000 units, what is the required input to meet demand? You’ll note that the required input is the same if the scrap rates are reversed for processes 1 and 3.

What is the electrical potential energy of the pair : Two charged particles, Q1 = +4.90 nC and Q2 = -2.80 nC, are separated by 36.0 cm. What is the electrical potential energy of the pair

User Account

All Pages