CASE: Electronic Timing, Inc.

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CASE: Electronic Timing, Inc.

Electronic Timing, Inc. (ETI), is a small company founded 15 years ago by electronics engineers Tom Miller and Jessica Kerr. ETI manufactures integrated circuits to capitalize on the complex mixed-signal design technology and has recently entered the market for frequency timing generators, or silicon timing devices, which provide the timing signals or “clocks” necessary to synchronize electronic systems. Its clock products originally were used in PC video graphics applications, but the market subsequently expanded to include motherboards, PC peripheral devices, and other digital consumer electronic, such as digital television boxes and game consoles. ETI also designs and markets custom application-specific integrated circuits (ASICs) for industrial customers. The ASIC’s design combines analog and digital, or mixed-signal, technology. In addition to Tom and Jessica, Nolan Pittman, who provided capital for the company, is the third primary owner. Each owns 25 percent of the 1 million shares outstanding. Several other individuals, including current employees, own the remaining company shares.

Relative Valuation Model - Time Warner, Inc.

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Using the current market price of Time Warners organization and its debt (if any) and equity using the relative valuation model. Justify the current market price of Time Warner.

Be sure to show all calculations that support your findings, including those involving rates of return. In addition, defend which valuation model best supports your findings. Be sure to properly cite your references in your paper.

200 words needed

The Adjusted Present Value Approach to Valuing Leveraged Buyouts - Cheek Products

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The text is Corporate Finace by Ross, Westerfield, Jaffe, 8th edition

Cheek Products was founded 53 years ago by Joe Cheek and originally sold snack foods such as potato chips and pretzels.  Through acquisitions, the company has grown into a conglomerate with major divisions in the snack food industry, home security systems, cosmetics, and plastics.  Additionally, the company has several smaller divisions.  In recent years the company has been underperforming, but the company’s management doesn’t seem to be aggressively pursuing opportunities to improve operations (and the stock price).

Meg Whalen is a financial analyst specializing in identifying potential buyout targewrts.  She believes that two major changes are needed at Cheek.  First, she thinks that the company would be better off if it sold several divisions and concentrated on its core competencies in snack foods and home security systems.  Second, the company is financed entirely with equity.  Because the cash flows of the company are relatively steady, Meg thinks the company’s debt/equity ratio should be at least .25.  She believes these changes would significantly enhance shareholder wealth, bust she also believes that the existing board and company management are unlikely to take the necessary actions.  As a result, Meg thinks the company is a good candidate for a leveraged buyout.

Meg has suggested the potential LBO to her partners.  Her partners have asked Meg to provide projections of the cash flows for the company.  Meg has provided the following estimates (in millions):