Homework 7

Homework 7 - Michael Samuels 11/25/08 ACCY 110 Jones...

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Michael Samuels 11/25/08 ACCY 110 Jones Seventh Homework 1. Use the financial statements provided for homework 3 for Brinker International to answer these questions. It is a rapidly growing restaurant chain that owns Chili’s, Romano’s Macaroni Grill, On the Border and Maggiano’s. It increased the number of locations it operated by 11% in 2007, though it also increased the share of its locations that are franchises. As of June 27, 2007 (the end of its fiscal year) its stock price was $29.29 per share. a. Calculate the book value per share for the firm. # Shares Outstanding = 176,246,666-66,119,594 = 110,127,072 Shareholder’s Equity = $805,089,000. BV per Share = $805,089,000 / 110,127,072 = $7.31 b. Using the methods we discussed in the Antle chapter, identify what are the most likely factors that contribute to the large difference in the market value per share (which is a good estimate of the economic value per share) and the book value per share. Due to Brinker’s tremendous success they have produced a lot of goodwill and name recognition and these intangible assets are not included in the book value. This is a large reason for the huge difference between MV and BV.
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Homework 7 - Michael Samuels 11/25/08 ACCY 110 Jones...

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