Pace e Bene Unlimited Consolidated Statements of Income For the Years Ended December 31 ( in millions) XXXXXXXXXX Net sales 8,551$ $8,419 Cost of Sales 4, XXXXXXXXXX,485 Gross Margin 4, XXXXXXXXXX,934...

Pace e Bene Unlimited
Consolidated Statements of Income
For the Years Ended December 31
( in millions)
XXXXXXXXXX
Net sales 8,551$ $8,419
Cost of Sales 4, XXXXXXXXXX,485
Gross Margin 4, XXXXXXXXXX,934
Selling, General and Administrative Expenses 1, XXXXXXXXXX,508
Depreciation expense 25 XXXXXXXXXX28
Goodwill amortization 70 XXXXXXXXXX567
Restructuring charge - XXXXXXXXXX56
Operating income 2, XXXXXXXXXX,775
Interest and debt expense 23 XXXXXXXXXX251
Interest income (12) XXXXXXXXXX19)
Other expense, net 7 XXXXXXXXXX9
Income from continuing operations before income tax 2, XXXXXXXXXX,534
Provision for income taxes 86 XXXXXXXXXX572
Income from continuing operations, net of tax 1, XXXXXXXXXX962
Losses from discontinued operations, net of tax (216) -
Net Income 1,113$ XXXXXXXXXX$
Pace e Bene Unlimited
Consolidated Balance Sheet
For the Years Ended December 31
( in millions)
Cash and cash equivalents 2, XXXXXXXXXX,723
Accounts receivable, net 21 XXXXXXXXXX256
Inventories 1, XXXXXXXXXX,219
Other cu
ent assets 1, XXXXXXXXXX,297
Total Cu
ent Assets 4, XXXXXXXXXX,495
Property, Plant and Equipment, net 1, XXXXXXXXXX,025
Trademarks and Other Intangibles 2, XXXXXXXXXX,718
Goodwill and other 8, XXXXXXXXXX,771
Total Property, Plant and Equipment 12, XXXXXXXXXX,514
Total Assets 17,078$ XXXXXXXXXX,009$
Cu
ent Liabilities:
Accounts payable 179$ XXXXXXXXXX$
Product liability claims 2, XXXXXXXXXX,611
Taxes payable 45 XXXXXXXXXX360
Other cu
ent liabilities 1, XXXXXXXXXX,173
Total cu
ent liabilities 4, XXXXXXXXXX,340
Long-term liabilities
Long-term debt 3, XXXXXXXXXX,136
Other long-term debt 2, XXXXXXXXXX,035
Total long-term liabilities 6, XXXXXXXXXX,171
Equity 6, XXXXXXXXXX,498
Total liabilities and shareholders' equity 17,078$ XXXXXXXXXX,009$
Earnings per share
Income from continuing operations 2.28$ XXXXXXXXXX$
Losses from discontinued operations (0.37) -
Net Income 1.91$ XXXXXXXXXX$
XXXXXXXXXX
Year-end stock price $35.48 $33.48 INDUSTRY
Number of outstanding shares, 12/31 583,043, XXXXXXXXXX,848,102 AVERAGE
Sales multiplier 1.2
Free cash flow multiplier 8.5
Earnings multiplier 13
Accounts receivable turnover 30
Inventory turnover 5
Cu
ent ratio 0.85
Quick ratio 0.47
Cash flow ratio 0.33
Free cash flow ratio 0.15
Gross Margin % 52%
Return on assets ( net book value) 6.70%
Return on equity 18.10%
Earnings per share 2.33$
1. Evaluate Pace e Bene Unlimited(PeB) using financial ratio analysis. Because the calculation of some ratios requires the averaging of balance, assume that the balances in 2018
are the same as those in XXXXXXXXXXCompute the ratios for 2019 and 2020 and compare the trend to industry ratios. What makes PeB bette
worse than industry and what should they do?
liquidity - accounts receivable turnover, inventory turnover, cu
ent ratio, quick ratio, cash flow ratio, free cash flow ratio
profitability - gross margin percentage, return on assets, return on equity
2. Provide the following business valuations
Market Value
Book Value of Equity
Multiples
- Earnings
- Sales
- Free Cash Flow
3. What would be a reasonable valuation for Pace E Bene and WHY?
XXXXXXXXXXCompute the ratios for liquidity
a XXXXXXXXXXAccounts receivable T/o
XXXXXXXXXXInventory T/o
c XXXXXXXXXXCu
ent Ratio
d XXXXXXXXXXQuick Ratio
e XXXXXXXXXXCash flow ratio
XXXXXXXXXXCompute the ratios for profitability
a XXXXXXXXXXGross Margin Percentage
XXXXXXXXXXROA
c XXXXXXXXXXROE
XXXXXXXXXXCompute Business Valuations
a XXXXXXXXXXBook Value of Equity
XXXXXXXXXXMarket Value
c XXXXXXXXXXMultiples