The writer is very fast, professional and responded to the review request fast also. Thank you.
American Greetings Case
1. What is going on at American Greetings?
a. Discuss the competitiveness of the industry.
b. Discuss the factors that drive the fundamental value of American Greetings.
2. The shares of American Greetings are currently trading at an EBITDA multiple that is at the bottom of its peer group. Do you think a 3.5 times multiple is appropriate for American Greetings? If not, what multiple of EBITDA do you think is justified? What is the implied share price that corresponds to that multiple?
3. Using a marginal tax rate of 40% and a market risk premium of 5%, what is your estimate of the appropriate discount rate for the free cash flow forecast? Please explain your results and the implication for American Greetings. Based on a discounted cash flow model, what is your best estimate of the implied enterprise value of American Greetings and the corresponding implied share price? Explain your results and the implication for American Greetings. Use the following table to model the free cash flows for American Greetings for fiscal years 2012 through 2015. Forecast the Steady State cash flows in order to determine the Terminal Value. I have provided guidance for identifying the 2011 actual values and the forecasted values.
2011A
2012
2013
2014
2015
SS
Revenue Growth
5.3%
1.0%
1.5%
2.0%
2.5%
3.0%
Operating Margin
9.4%
9.0%
9.0%
9.0%
9.0%
9.0%
NWC Turnover
5.02
6.00
6.50
7.00
7.50
7.50
FA Turnover
1.95
1.95
1.95
1.95
1.95
1.95
WACC
9.1%
Tax Rate
40%
Revenue
Exhibit 2
EBIT
Exhibit 2
NWC
Exhibit 3
=Revenue/NWC TO
Fixed Assets
Exhibit 3
=Revenue/FA TO
ROC
=EBIT*(1-T)/(NWC+FA)
NOPAT
– Change in NWC
– Change in NFA
FCF
TV
DCF
PV
Debt
Exhibit 6
Equity
Shares
Exhibit 6
Implied Price
4. What are the key drivers of value in your model? Do you recommend repurchasing shares?
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more