|
Income statement 31 Dec 2012
|
£(million)
|
|
|
|
Revenue
|
|
62,000
|
|
|
Cost of sales
|
|
55,800
|
|
|
Gross Profit
|
|
6,200
|
|
|
Expenses
|
|
1,700
|
|
|
Operating profit
|
|
4,500
|
|
|
Interest cost
|
|
520
|
|
|
Profit before tax
|
|
3,980
|
|
|
dividends
|
|
1,800
|
|
|
retained earnings
|
|
1,066
|
|
|
|
|
|
|
|
Balance sheet extracts at 31 Dec 2012
|
|
|
|
|
£ (million)
|
£ (million)
|
|
|
|
2012 2011
|
|
long term debt
|
|
8700 10800
|
|
short term debt
|
|
1400 1620
|
|
Total debt
|
|
10,100 12,420
|
|
Total equity
|
|
16,623 n/a
|
|
|
|
|
|
Additional Data at 31 Dec 2012
|
|
|
|
|
P/E ratio
|
|
14
|
|
|
Price to cashflow
|
|
7.5
|
|
|
Corporate tax
|
|
28%
|
|
|
number of ordinary shares of £1 (in millio
|
|
1400
|
|
1. Calculate the value of each share as at 31 Dec 2012
2. Calculate dividend yield as at 31 Dec 2012
3. Calculate the price to book ratio as at 31 Dec 2012
4. Explain the four market multiple ratios which were identified in this question and comment on the value of this company
5. Critically discuss whether book value is a good estimate of economic value of assets? Briefly outline how we can arrive at economic value by giving two examples of balance sheet items.