case questions - Warren Buffett 1. What is the possible...

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Warren Buffett 1. What is the possible meaning of the changes in stock price for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement? Specifically, what does the $2.55 billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp? 2. Based on the multiples for comparable regulated utilities, what is the range of possible values for PacifiCorp? What questions might you have about this range? 3. Assess the bid for PacifiCorp. How does it compare with the firm’s intrinsic value? As an alternative, the instructor could suggest that students perform a simple discounted cash- flow (DCF) analysis. 4. How well has Berkshire Hathaway performed? How well has it performed in the aggregate? What about its investment in MidAmerican Energy Holdings? 5. What is your assessment of Berkshire’s investments in Buffett’s Big Four: American Express, Coca-Cola, Gillette, and Wells Fargo? 6. From Warren Buffett’s perspective, what is the intrinsic value? Why is it accorded such importance? How is it estimated? What are the alternatives to intrinsic value? Why does Buffett reject them? 7. Critically assess Buffett’s investment philosophy. Be prepared to identify points where you agree and disagree with him. 8. Should Berkshire Hathaway’s shareholders endorse the acquisition of PacifiCorp?
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Body Shop 1. Why would a company like The Body Shop want to forecast its financial statements? 2. Let us vault past the exercise questions and go straight into the three-year forecasts: How did you prepare your forecast and what numbers did you get? 3. How much debt financing will The Body Shop need over this forecast period? What are the key drivers of this need, and how much do debt needs vary as the assumptions vary? 4. What issues does this analysis raise for Roddick?
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Kota 1. How did Mehta construct his financial forecast? Using the financial forecast, prepare to show the “cash cycle” of the firm (i.e., the flow of funds through the working-capital accounts of the firm). 2. Examine the exhibits in the case. On the basis of Mehta’s forecast, how much debt will Kota need to arrange for the coming year? Will Kota be able to repay the line of credit this year? 3. Why do Kota’s financial requirements vary across the year? What are the key determinants of Kota’s borrowing needs? Please exercise the spreadsheet model to identify the critical forecast assumptions. 4. Consider the f our memos that Pundir received. Use your i ntuition to assess the desirability of two of the proposals: Pondicherry Textile’s request for credit : What will be this proposal’s effects on accounts receivable and debt balances across the year? The level-production proposal
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This note was uploaded on 11/22/2011 for the course BUS 401 taught by Professor Terrywilson during the Spring '11 term at Solano Community College.

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case questions - Warren Buffett 1. What is the possible...

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