Chapter_09_Solutions_ABP_Revision_march 28 10 pm

Chapter_09_Solutions_ABP_Revision_march 28 10 pm -...

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Valuation Measuring and Managing the Value of Companies 5th Edition Chapter 9 Solutions Forecasting Performance Version 1.0 April 1, 2010 Revision by Annette Poulsen March 27 2011
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Chapter 9 Question 1 My new download of Firefox 4 is unable to open it. www.pg.com/en_US/downloads/investors/annual_reports/2009/PG_2009_AnnualReport.pdf Annual report, 2009 Note 3 Supplemental financial information Selected components of current and noncurrent liabilities were as follows: Accrued and other liabilities—current Marketing and promotion 2,378.0 2,760.0 Compensation expenses 1,464.0 1,527.0 Based on a Web search: Accrued Gillette exit costs 111.0 257.0 The Company acquired the Gillette Company in October 2005. At that time, Taxes payable 722.0 945.0 we recognized an assumed liability for Gillette exit costs of $1.23 billion, Other 3,926.0 5,610.0 including $854 million in separations related to approximately 5,500 people, Total 8,601.0 11,099.0 $55 million in employee relocation costs, and $320 million in other exit costs. Consolidated statements of earnings Gillette exit costs (primarily severance costs) are a restructuring charge and Revenues 79,029.0 81,748.0 therefore should be treated as a debt equivalent. Debt equivalents should not be forecasted within free cash flow, and therefore should not be Ratio analysis included in accrued and other liabilities. Percent of revenues 10.9% 13.6% This problem offers a caveat to simply forecasting every account. Make sure you consider whether the various cash flows will be observed in the future. 2009 2008
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Chapter 9 Questions 2–4 PartsCo PartsCo Income statement Financial ratio analysis Prior Current Forecast Prior Current Forecast $ million year year year Percent of sales year year year Revenues 782.6 900.0 1,035.0 Revenues n/a 15.0% 15.0% Cost of sales (508.7) (612.0) (703.8) Cost of sales /revenues 65.0% 68.0% 68.0% Selling costs (156.5) (171.0) (196.7) Selling costs / revenues 20.0% 19.0% 19.0% Depreciation (27.0) (31.3) (36.0) n/a 5.0% 5.0% Operating profit 90.4 85.7 98.6 Operating profits 11.5% 9.5% 9.5% Interest (5.0) (7.5) (9.5) Interest (percent of prior debt) n/a 4.4% 4.4%
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This note was uploaded on 06/06/2011 for the course FINA 4210 taught by Professor Staff during the Spring '08 term at University of Georgia Athens.

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Chapter_09_Solutions_ABP_Revision_march 28 10 pm -...

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