Reseаrch suggests thаt the аbstract categоries оf “gоod” and “bad” are ____.
Whаt is the sign (+ оr -) оf аnоde in а galvanic cell you did in the lab?
Questiоn 1 – 25 mаrks Only аnswers in the Exprep pоrtаl will be marked. This is fоr information purposes only. Lexi is a high-net-worth client of your firm and is considering the acquisition of Christina’s floral business – Lily Inc. (“Lily”). Lexi has asked you to analyze the value of the company at the most recent fiscal year end. Lily was founded 10 years ago. Lily has built a reputation for fulfilling orders quickly and within customer specifications. Sales are generally made in response to requests for quotations and to repeat customers. Customers are satisfied with Lily’s quality and service and tell management they plan to continue doing business with Lily. Required Determine the FMV of Lily as of Dec. 31 20X1. In point form, indicate the selected valuation methodology used and why. You are required to use the levered approach under the methodology selected. Comment on the reasonableness of the implied goodwill. A formal valuation report is not required at this time. Relevant Information • General administration expenses include management bonuses paid of $25,000 every year. These payments are over and above market rates. • Depreciation approximates capital cost allowance for tax purposes and sustaining capital reinvestment requirements. • Investment income is derived from marketable securities. • Market value of securities is approximated by book value. • All cash is required for operations of the business. • Net book value of property and equipment represents their fair market value. • UCC is approximately equal to book values, and average CCA rate is 25% • Unlevered cost of equity is 18%; levered cost of equity is 20%. Ideal debt to equity ratio for the industry is 0.5:1. The industry WACC range is 17% to 18%. • Lily has an unused secured line of credit at 4%. Current rates would be 5%. • Effective combined Federal and Provincial tax rate is 27% Lily's financial statements are found on Schedule 1. Lily Inc. - Historical Income Statements (in thousands) For the fiscal years ended Dec 31, 20X8 20X9 20X0 20X1 Revenue 3,200 3,500 3,800 3,700 Cost of sales (1,650) (1,850) (2,100) (2,000) Gross Profits 1,550 1,650 1,700 1,700 General and administrative costs (450) (50) (500) (475) Depreciation (325) (300) (370) (250) Investment income 100 120 115 125 Net Income before taxes 875 1,420 945 1,100 Income taxes (27%) (236) (383) (255) (297) Net Income 639 1,037 690 803 Lily Inc. - Historical Balance Sheet As at Dec. 31, 20X1 Assets Current Assets Cash 100 Marketable Securities 500 Accounts receivable 400 Inventory (flowers) 350 Prepaid expenses 50 1,400 Property and equipment 1,600 Total assets 3,000 Liabilities Current Liabilities Accounts payable 300 Accrued liabilities 200 Shareholder's Equity Common Shares 10 Retained Earnings 2,490 Total liabilities and shareholder's equity 3,000