Question

Luther Corporation Consolidated Balance Sheet December​ 31, 2006 and 2005​ (in $​ millions) Assets 2006 2005...

Luther Corporation

Consolidated Balance Sheet

December​ 31, 2006 and 2005​ (in $​ millions)

Assets

2006

2005

Liabilities and

​Stockholders' Equity

2006

2005

Current Assets

Current Liabilities

Cash

62.562.5

58.5

Accounts payable

84.384.3

73.5

Accounts receivable

56.956.9

39.6

Notes payable​ /

​short-term debt

9.29.2

9.6

Inventories

45.845.8

42.9

Current maturities of

​long-term debt

38.538.5

36.9

Other current assets

5.85.8

3.0

Other current liabilities

6.0

12.0

               Total current assets

171171

144.0

        Total current liabilities

138138

132.0

​Long-Term Assets

​Long-Term Liabilities

  Land

6666

62.1

​ Long-term debt

239.8239.8

168.9

  Buildings

108.4108.4

91.5

  Capital lease obligations

  Equipment

115.4115.4

99.6

  Less accumulated

  depreciation

​(57.457.4​)

​(52.5)

Deferred taxes

22.8

22.2

Net​ property, plant, and

equipment

232.4232.4

200.7

Other​ long-term liabilities

minus−minus−minus−

minus−minus−minus−

Goodwill

60.0

minus−minus−

    Total​ long-term liabilities

262.6262.6

191.1

Other​ long-term assets

63.0

42.0

Total liabilities

400.6400.6

323.1

    Total​ long-term assets

355.4355.4

242.7

​Stockholders' Equity

125.8125.8

63.6

Total Assets

526.4526.4

386.7

Total liabilities and

​Stockholders' Equity

526.4526.4

386.7

Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at​ $16 per​ share, then what is​ Luther's enterprise​value?

A.

minus−$ 543.50$543.50

million

B.

$ 776.40$776.40

million

C.

$ 388.20$388.20

million

D.

$ 526.40$526.40

million

Business   Finance   
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Homework Answers

Answer #1

Given,

Cash = $62.50 million

Short-term debt = $9.20 million

Current maturities of long term debt = $38.50 million

Long-term debt = $239.80 million

Shares outstanding = 10.2 million shares

Price per share = $16

Solution :-

Luther's enterprise value

= (shares outstanding x price per share) + short-term debt + current maturities of long term debt + long term debt - cash

= (10.2 million shares x $16) + $9.20 million + $38.50 million + $239.80 million - $62.50 million

= $163.20 million + $9.20 million + $38.50 million + $239.80 million - $62.50 million

= $388.20 million

Thus, Luther's enterprise value is $388.20 million

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