What is the value and fcff ratio

Assignment Help Financial Management

Reference no: EM131575442

Grumman Corporation, a producer of military aircraft, reported net income of exist120 million in 2013, after paying interest expenses of exist19 million. The depreciation allowance in 2013 was exist77 million, while capital expenditures amounted to exist80 million in the same year. Working capital increased by exist15 million in 2013. (The tax rate is 40%) Grumman finances 10% of its net capital investment and working capital needs using debt. The free cash flows to equity are expected to grow 10% a year from 2014 to 2018, and 6% a year after that. The stock had a beta of 0.80, and this is expected to remain unchanged. The treasury bond rate is 7%. ERP of 5.5%. A. Estimate the Price/FCFE ratio for the firm. B. Grumman has exist251 million in debt outstanding at the end of 1993. What is the Value/FCFF ratio? the Value/EBITDA ratio? Why are they different from the Price/FCFE ratio?

Reference no: EM131575442

Questions Cloud

Holding sales constant-lower production costs will : Holding sales constant, lower production costs will

Develop ability to perform financial analysis : Develop ability to perform financial analysis through the application of concepts, methods, and tools including. Describe financial issues, problems,

What would be the weighted average cost of capital for firm : Consider the following balance sheet of a publicly held company. What would be the weighted average cost of capital for this firm?

With no change in the value inventory : With no change in the value inventory, Dell's successful reduction in manufacturing costs (lower costs of goods sold) will

What is the value and fcff ratio : What is the Value/FCFF ratio? the Value/EBITDA ratio?

Standard deviation of return on your client portfolio : What is the expected return and standard deviation of return on your client’s portfolio?

Business strategy includes cost reduction initiatives : Dell's business strategy includes cost reduction initiatives such as lowering manufacturing costs, structural or design costs, and operating expenses.

Compute the amount of each installment : A loan of US$ 3,000 disbursed today is repaid in 5 installments commencing at end of year one.Compute the amount of each installment.

Considered difficulty with regards to the capm : Which of the following is not considered a difficulty with regards to the CAPM?

User Account

All Pages