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Gabriella, an equity analyst, is valuing Vivi Farm. She adds a note in Exhibit...
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Gabriella, an equity analyst, is valuing Vivi Farm. She adds a note in Exhibit 1 & 2 for the earning’s normalization.
Exhibit 1
Vivi Farm’s Selected Financial Data for Year Ended 2016
(in million IDR unless otherwise stated)
Gross revenue from crops, livestock, feed, and so on | IDR 2,500,000 |
Cost of Goods Sold | IDR 1,000,000 |
Selling, General, & Administrative Expenses | IDR 900,000 |
Depreciation & Amortization Expenses | IDR 200,000 |
Tax Rate | 25% |
Note : 1. Vivi Farm has IDR 750,000 debt outstanding at an interest rate of 8%, and it comprises 30% of total assets on balance sheet. Debt will be a part of acquisition transaction. 2. Vivi Farm holds IDR 200,000 cash and cash equivalent, but it will not be a part of the assets under acquisition transaction. |
Exhibit 2
Additional Data & Gaby’s Estimates for Normalization
(in million IDR unless otherwise stated)
1 | The cost of goods sold ratio to revenue should be higher, at 45%. |
2 | SG&A expenses include IDR 400,000 in owners compensation. According to Gaby’s research, owners compensation expense for similar size farm is IDR 200,000 |
3 | A ranch is not required for the farm’s core operations. The reported SG&A expenses include IDR 100,000 for operating expenses related to the property. The ranch will be kept by the current owner and is not a part of the purchase. |
4 | For pro forma estimations, Gaby will consider depreciation & amortization at 10% of gross revenue. |
Using the company’s data and Gabriella’s assessment in Exhibit 1 & 2, Vivi Farm’s normalized net operating profit after tax in million IDR will be……………………