Explore BrainMass

Explore BrainMass

    Enterprise Market Value of Hp

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A.
    General Mills, Inc., the large manufacturer of packaged foods, reported the following
    in its annual report for the year ending May 25, 2008 (in millions):
    Short-term borrowing $ 442.0
    Long-term debt 4,348.7
    Stockholders' equity 6,215.8
    The short-term borrowing and long-term debt are carried on the balance sheet at
    approximately their market value. The firm's 337.5 million shares traded at $62 per
    share when the annual report was released. From these numbers, calculate General
    Mills's enterprise market value (the market value of the firm).
    b. Hewlett-Packard, the computer equipment manufacturer and systems consultant, had
    2,473 million shares outstanding in May 2008, trading at $47 per share. Its most
    recent quarterly report listed the following (in millions):
    Investments in interest-bearing debt securities and deposits $ 11,513
    Short-term borrowings 711
    Long-term debt 7,688
    Stockholders' equity 38,153
    Calculate the enterprise market value of Hewlett-Packard. The question requires you
    to consider the treatment of the interest-bearing debt investments. Are they part of
    the enterprise?

    © BrainMass Inc. brainmass.com June 3, 2020, 11:05 pm ad1c9bdddf
    https://brainmass.com/business/finance/fiance-help-262646

    Solution Preview

    a)
    Enterprise Value = Market Cap + Preferred Stock + Debt - Cash Equivalents
    Market cap = 337.5*62=20925
    Debt = Short term borrowings + long term debt = 442+4348.7=4790.7
    Preferred stock = 0
    Since no ...

    Solution Summary

    This solution contains step-by-step calculations to determine the enterprise market value of Hp considering the interest-bearing debt investments.

    $2.19

    ADVERTISEMENT