Memo Harvard Case Solution & Analysis

Memo Case Study Analysis

DCF Approach

A complete DCF valuation has been performed with the view point of given case assumptions. The sales and cost of good sold has been taken from the forecasted income statement. The valuation includes the terminal value for generating proper results. Furthermore, it could be seen that DCF valuation yield positive outcomes and positive free cash flows. Along with this all, it yields a positive NPV for the company. This represent that company’s operations and strategic moves are consistent and having a potential to yield higher results. Furthermore, company’s asset valuation is 5,033,890 which is based on asset discount rate of 12.1% for expected outcomes. This reveals that company has a sound financial position for future years too. To buy back the shares from investor is a new concept for the company. To analyze the risk associated with this, company performed all necessary calculations by using DCF approach. Thus, the per share price has been calculatedfor future years which represent an increasing trend in share value with a wide margin. It could be seen that per share value for the2012 is 2.18 out of total outstanding shares of 9,945. For the year 2018, it represents a per share value of 78.51 because of increased income. The per share value represent that company’s one share has a value of 2.18. (See appendix 3 for detailed DCF calculations& per share valuation)

Recommendations

After analyzing all the situation critically, it is recommended to Teuer Furniture that DCF valuation represent positive outcomes because of sound financial statements. It is further recommended that repurchases of shares from investors at that time is profitable and additionally, the company has the chance to resale this shares after some years which will result in a huge profit- twice. The discounted cash flows represent positive outcomes for future because of the company’s strategic moves toward opening of new projects. Furthermore, buy back of shares represent that the company has the potential to buy back its shares from investors..................

 

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