Market multiple ratios for Lula Instruments Inc

jagguarpaw January 21, 2017 0 Comments

Question: market multiple ratios for Lula Instruments Inc…

Calculate the following market multiple ratios for Lula Instruments Inc. at its 2015 financial year-end:

i.EV/EBITDA ii.Price-to-earnings ratio (PE ratio)

iii.Price-to-cash-flow ratio

iv.Contrast and explain the results of the different market multiple ratios that you calculated.

  1. Evaluate the usefulness of market multiple ratios in company valuation

 

Consolidated Balance Sheets December 31, 2015

(Millions of dollars, except share amounts)

Assets

Consolidated Balance Sheets
(Millions of dollars, except share amounts)
Share price

31-Dec-15 54.81
Assets
Cash and cash equivalents 1,000
Short-term investments 2,218
Accounts receivable, net of allowances of ($7) and ($12) 1,165
Raw materials 109
Work in process 846
Finished goods 736
Inventories 1,691
Prepaid expenses and other current assets 1,000
Total current assets 7,074
Property, plant and equipment at cost 5,465
Accumulated depreciation -2,869
Property, plant and equipment, net 2,596
Long-term investments 221
Goodwill, net 4,362
Acquisition-related intangibles, net 1,583
Deferred income taxes 201
Capitalized software licenses, net 46
Overfunded retirement plans 85
Other assets 62 233
Total assets   $ 16,230
Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt $ 1,000
Accounts payable 386
Accrued compensation 664
Income taxes payable 95
Accrued expenses and other liabilities 410
Total current liabilities 2,555
Long-term debt 3,120
Underfunded retirement plans 196
Deferred income taxes 37
Deferred credits and other liabilities 376
Total liabilities 6,284
Stockholders’ equity:
Preferred stock, $25 par value. Authorized – 10,000,000 shares
Participating cumulative preferred. None issued 0
Common stock, $1 par value. Authorized – 2,400,000,000 shares
Shares issued – 1,740,815,939 1,741
Paid-in capital 1,629
Retained earnings 31,176 29,653
Treasury common stock at cost
Shares: 2015 – 729,547,527; 2014 – 694,189,127 -24,068
Accumulated other comprehensive income (loss), net of taxes (AOCI) -532
Total stockholders’ equity 9,946
Total liabilities and stockholders’ equity $ 16,230