{"id":7599,"date":"2021-10-13T16:44:01","date_gmt":"2021-10-13T16:44:01","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/american-greetings-case-study-accounting-homework-help\/"},"modified":"2021-10-13T16:44:01","modified_gmt":"2021-10-13T16:44:01","slug":"american-greetings-case-study-accounting-homework-help","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/american-greetings-case-study-accounting-homework-help\/","title":{"rendered":"American greetings case study | Accounting homework help"},"content":{"rendered":"
\n

American Greetings Case<\/strong><\/u><\/p>\n

1.<\/em> \u00a0What is going on at American Greetings?\u00a0<\/p>\n

a. \u00a0Discuss the competitiveness of the industry.<\/p>\n

b. \u00a0Discuss the factors that drive the fundamental value of American Greetings.<\/p>\n

2.<\/em> \u00a0The shares of American Greetings are currently trading at an EBITDA multiple that is at the bottom of its peer group. \u00a0Do you think a 3.5 times multiple is appropriate for American Greetings? \u00a0If not, what multiple of EBITDA do you think is justified? \u00a0What is the implied share price that corresponds to that multiple?<\/p>\n

3.<\/em> \u00a0Using a marginal tax rate of 40% and a market risk premium of 5%, what is your estimate of the appropriate discount rate for the free cash flow forecast? Please explain your results and the implication for American Greetings. Based on a discounted cash flow model, what is your best estimate of the implied enterprise value of American Greetings and the corresponding implied share price? Explain your results and the implication for American Greetings. Use the following table to model the free cash flows for American Greetings for fiscal years 2012 through 2015. \u00a0Forecast the Steady State cash flows in order to determine the Terminal Value. I have provided guidance for identifying the 2011 actual values and the forecasted values.<\/p>\n

2011A<\/strong><\/p>\n

2012<\/strong><\/p>\n

2013<\/strong><\/p>\n

2014<\/strong><\/p>\n

2015<\/strong><\/p>\n

SS<\/strong><\/p>\n

Revenue Growth<\/p>\n

5.3%<\/p>\n

1.0%<\/p>\n

1.5%<\/p>\n

2.0%<\/p>\n

2.5%<\/p>\n

3.0%<\/p>\n

Operating Margin<\/p>\n

9.4%<\/p>\n

9.0%<\/p>\n

9.0%<\/p>\n

9.0%<\/p>\n

9.0%<\/p>\n

9.0%<\/p>\n

NWC Turnover<\/p>\n

\u00a05.02\u00a0<\/p>\n

\u00a06.00\u00a0<\/p>\n

6.50\u00a0<\/p>\n

\u00a07.00\u00a0<\/p>\n

\u00a07.50\u00a0<\/p>\n

\u00a07.50\u00a0<\/p>\n

FA Turnover<\/p>\n

\u00a01.95\u00a0<\/p>\n

\u00a01.95\u00a0<\/p>\n

1.95\u00a0<\/p>\n

\u00a01.95\u00a0<\/p>\n

\u00a01.95\u00a0<\/p>\n

\u00a01.95\u00a0<\/p>\n

WACC<\/p>\n

9.1%<\/p>\n

Tax Rate<\/p>\n

40%<\/p>\n

Revenue\u00a0<\/p>\n

Exhibit 2<\/p>\n

EBIT\u00a0<\/p>\n

\u00a0Exhibit 2<\/p>\n

NWC\u00a0<\/p>\n

Exhibit 3<\/p>\n

\u00a0=Revenue\/NWC TO<\/p>\n

Fixed Assets\u00a0<\/p>\n

Exhibit 3<\/p>\n

\u00a0=Revenue\/FA TO \u00a0<\/p>\n

ROC<\/p>\n

=EBIT*(1-T)\/(NWC+FA)<\/p>\n

NOPAT<\/p>\n

– Change in NWC<\/p>\n

– Change in NFA<\/p>\n

FCF<\/p>\n

TV<\/p>\n

\u00a0<\/p>\n

DCF<\/p>\n

PV<\/p>\n

Debt\u00a0<\/p>\n

Exhibit 6<\/p>\n

Equity<\/p>\n

Shares\u00a0<\/p>\n

Exhibit 6<\/p>\n

Implied Price<\/p>\n

4.<\/em> \u00a0What are the key drivers of value in your model? Do you recommend repurchasing shares?<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

American Greetings Case 1. \u00a0What is going on at American Greetings?\u00a0 a. \u00a0Discuss the competitiveness of the industry. b. \u00a0Discuss the factors that drive the fundamental value of American Greetings. 2. \u00a0The shares of American Greetings are currently trading at an EBITDA multiple that is at the bottom of its peer group. \u00a0Do you think […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-7599","post","type-post","status-publish","format-standard","hentry","category-homework-help"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/7599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=7599"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/7599\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=7599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=7599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=7599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}