ACT465 – PP – M8

Read the Frosty Footwear Inc. case (Links to an external site.).

Submit your excel files and word documents with the analysis and answers to each of these questions:

  1. Analyze the financial statements by performing an income statement profitability analysis, researching the components of Cost of Goods Sold and comparing the gross profit margin with related industry data. Summarize your observations.
  2. In Excel, develop a forecast of future financial results for the next five years.
  3. Consider any valuation adjustments or discounts for lack of marketability, lack of control, and loss of key person.
  4. Prepare a valuation calculation using both the income approach and market approach. Summarize the process used to reach your calculations.
  5. Arrive at a conclusion of value after reconciling the results obtained under different business value approaches and methods and prepare a valuation report to present to the current owners.
  6. Make a final recommendation. Should Frosty Footwear be sold now or should it be developed further to enhance its future value for sale at a later date?

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