BUS4304 The Dukes Sporting Goods Store Case Study
OBJECTIVEThe goal of this analysis is to determine a financial valuation of the fair market value of 100% of The Dukes Sporting Goods Store (Dukes), by using two of the three approaches to valuation (income and market approaches, but not the cost approach). The valuation date is December 31 of the current year.The following Excel file containing two spreadsheets: Dukes Discounted Cash Flow Analysis and Market Approach.Data have been entered in these spreadsheets that will allow you to calculate valuations for Dukes under the income and market approaches.FACTSASSUMPTIONSINCOME APPROACH 1. Forecast. Use the Discounted Cash Flow Analysis spreadsheet provided by your instructor and forecast revenues and expenses for Current Year + 1 (CY+1), CY+2, CY+3, and Terminal Year. For this case study, use only the previous years revenues and expenses as a guide. (Normally, you would also use other information about the economy, the industry, the company, and so forth). Come up with your own reasonable forecast.Net income. Calculate the net income for CY+1, CY+2, CY+3, and terminal year.Net cash flow. Calculate the net cash flow for CY+1, CY+2, CY+3, and terminal year.Net present value. Calculate the NPV of Dukes.MARKET APPROACH After an exhaustive search, three businesses that appear to be comparable to Dukes are found. The Market Approach spreadsheet gives basic financial information about the businesses and recent transactions involving them and provides space for the calculations. The comparable businesses are the following:LIQUIDATION VALUE What is the liquidation value (as opposed to the fair market value) of Dukes? Look at the present value of all assets that could be liquidated and account for all debts (at their present value). Determine the sum of those values. In other words, if the company were to be liquidated, how much cash would be left over?
