Cost Accounting Proof Reading Services

Cost Accounting Proof Reading Services

Chapter 4:

Enterprise Value (EV) can be termed as company’s total value. The formula for calculation of the same is:-

Equity Value can be defined as Value of Outstanding Stock of Company. The formula for Equity Value is

Equity Value =Share price * Common Shares Outstanding

Equity Value for General Mills at beginning of 2006:-

Equity Value = $47 * 369 Million

= $17343 Million

Free cash flow refers to the cash generated by the company. It can be calculated as follows:-

Free Cash flow = Operating Cash flow – Expenses made on capital

a. Free cash flow will remain at 2009 levels after 2009

P₀ = D1 / (Ke – g)

Where,

P_{0 =}Value

g = Growth rate

Ke = Expected rate of return shareholder

P₀ = 1637 / 0.09

= 18188.889

Read More- FINANCIAL ACCOUNTING ASSIGNMENT HELP

Enterprise value:-

Year	Cash flow from operation (A)	Cash investment in operations (B)	Free Cash flow A-B	PV Factor	Present value
2006	2014	300	1714	0.917	1572.477
2007	2057	380	1677	0.842	1411.497
2008	2095	442	1653	0.772	1276.419
2009	2107	470	1637	0.708	1159.692
After 2009			1637		18188.000
Enterprise value					23608.086

Value Per share = Value of enterprise / Outstanding shares

= 23608.086/ 369

= $63.979

Cost Accounting OZ Assignments = 63.979 : 47

b. Cash flow at 3%

P₀ = Cashflow / (Ke – g)

= 1686.11 / (0.09 – 0.03)

= 28101.833

Enterprise value:-

Year	Cash flow from operation (A)	Cash investment in operations (B)	Free Cash flow A-B	PV Factor	Present value
2006	2014	300	1714	0.917	1572.477
2007	2057	380	1677	0.842	1411.497
2008	2095	442	1653	0.772	1276.419
2009	2107	470	1637	0.708	1159.692
After 2009			1686.11		28101.833
Enterprise value					33521.919

Value Per share = Value of enterprise / Outstanding shares

= 33521.919/ 369

= $90.845

Cost Accounting OZ Assignments

Cost Accounting OZ Assignments = 90.845 : 47

Chapter 11:

Cost Accounting OZ Assignments Method 1

Cost Accounting OZ Assignments

= 2740- 147.1 – 3405.9

= $813M

Method 2

Free Cash Flow = Net Operating profit after tax – Net Investment in new operating capital

Cashflow from operation activities	Working Capital	Amount (Million Dollars)
Operating income after tax		2740.10
Adjustments for working capital:-
- Operating Asset	1260.80
+ Operating Liabilities	84.6	(1176.2)
Net Cashflow from Operating activities		1563.9

Cash flow from investing activities
Less Financial Assets purchased	111.9
Net Cash used from investing		(111.9)

Cash flow from Financing activities
+ Borrowed financial obligation	2101
Net cashflow from financing activities		2101
Net cashflow from operations		3553

Assumptions:-

There is no Capital expenditure so Net cashflow from operations will be free cash flow in method 2 of A.

Finance expense is treated as a part of financial obligation

Cost Accounting OZ Assignments

= (2429- 142.4*.634) – 898

= $2429 – 90.28 - 898

= $1440.72M

References

1.PWC, 2014. Valuation of an industrial company Pavia University. PWC. Also available at http://economia.unipv.it/pagp/pagine_personali/ecotta/1415/PRICEWATERHOUSECOOPERS%203.%20VALUATION%20OF%20AN%20INDUSTRIAL%20COMPANY.pdf.

2.Al Zararee, A.N. and Al-Azzawi, A., 2012. The impact of free cash flow onmarketvalue offirm. Global Review of Accounting and Finance Vol. 5. No. 2. September 2014. Pp. 56 – 63

3.Ivanovski, Z., Ivanovska, N. andNarasanov, Z., 2014. Fundamental analysis anddiscoiuntedfree cash flow valuation of stocks at Macedonian Stock Exchange. UTMS Journal of Economics, 5(1), pp.11-24.

4.Wang, F., Zhu, Z. and Hoffmire, J., 2015, January. Financial Reporting Quality, Free Cash Flow, and Investment Efficiency. In SHS Web of Conferences (Vol. 17). EDP Sciences.