Based on the Corporate Valuation Model, the Value of a Company's

question 1

Multiple Choice

Based on the corporate valuation model, the value of a company's operations is $900 million. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short- term investments that are unrelated to operations, $20 million in accounts payable, $110 million in notes payable, $90 million in long- term debt, $20 million in preferred stock, $140 million in retained earnings, and $280 million in total common equity. If the company has
25 million shares of stock outstanding, what is the best estimate of the stock's price per share?

• A) $23.00
• B) $25.56
• C) $28.40
• D) $31.24
• E) $34.36

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Definitions:

Downstream

In the context of supply chain and business, it refers to all activities or processes that occur closer to the end-user or consumer, often including refining, selling, and distribution.

Inventory Management

The supervision of non-capitalized assets (inventory) and stock items, a component of supply chain management that involves overseeing the flow of goods from manufacturers to warehouses and from these facilities to point of sale.

Supply Chain

A network of entities, including suppliers, manufacturers, and retailers, involved in the production, transportation, and distribution of goods from raw materials to final consumers.

Just-In-Time

A supply chain and inventory management strategy that aligns raw-material orders from suppliers directly with production schedules to reduce inventory costs.