. Complete the following ratio analysis for ABC sporting Goods.Utilize: at Go to Industry Financials on the Blue Navigation BarSelect – Corporations 249 not Sole Proprietorships 141Select Retail TradeSelect Sporting good – Hobby book – MusicCalculate the following ratios: (Based on the last 3 year average)Compare these ratios to those found in BizStats. Comment on any differences and how they impact the value of the business. Identify any significant trends in the business.. Estimate the business value using BizStats – Valuation Rule for Sporting Goods Stores at .Under reports/valuation/valuation-rule-thumb.phpAdjust the business valuation based on your completed calculation and the ratio and trend analysis performed in step I.. Calculate the viability of purchasing the business based on the following parameters:You can finance the business for 20% down with an interest rate of 5%, amortization over 20 years. Use the following formula:Purchase price $100,000, down payment 20% or $20,000 which results in $80,000 being financed. For $1,000 financed at 5%, the factor to calculate your monthly payment is .66x for every $100 borrowed. That equals $66/month or $792/year. We now can calculate the free cash flow available to pay the loan amount. We can use the following formula:Net Profit+interest paid (use previous years amount from P&L)+Depreciation and amortization= Cash flowFor example, if we have $10,000 for our cash flow and our payments are $528 x 12 months = $6,336; then to calculate our DSC or debt service coverage ratio, we divide the Cash flow by the annual debt service or $10,000 / $6,336 =1.58x. If we borrowed $400,000 our monthly payment is $2,640 or $31,680 and if our cash flow is $100,000 then the DSC is 3.16x. Anything greater than 1.20 is considered to be adequate. Comment on the result.
The post Complete the following ratio analysis for ABC sporting Goods.Utilize: at Go to Industry Financials on the Blue Navigation BarSelect – Corporations 249 not Sole Proprietorships 141Select Retail TradeSelect Sporting good – Hobby book – MusicCalculate the following ratios: (Based on the last 3 year average)Compare these ratios to those found in BizStats. Comment on any differences and how they impact the value of the business. Identify any significant trends in the business.. appeared first on Homeworkaider.
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