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Tasks to complete: Step 1 – Compute Mean and Median Values for peer-organizations. (Exclude H/D from the computations. Step 2 – Present and JUSTIFY your estimates using EACH of the following:. a- Pric

Harley-Davidson Inc. 2004 ($ millions) Net income $ 889.77 Number of common shares, millions 294.31 Earnings before interest and tax $ 1,402.30 Tax…

Tasks to complete: Step 1 – Compute Mean and Median Values for peer-organizations. (Exclude H/D from the computations.   Step 2 – Present and JUSTIFY your estimates using EACH of the following:.                a- Price/earnings                  b- MV firm/EBIT(1 – tax rate)                  c – MV equity/BV equity                  d – MV firm/BV firm                   e – Price/sales (x)                  f – MV firm/sales (x)           Step 3 – Present your “estimated indicators of value” in a matrix format.         Step 4 – Present the implied value of HOG common stock per share for each indicator of value in matrix format. Step 5 – Add a Text Box and present an evaluation of your best analysis for a “fair price” for HD Shares.

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Harley-Davidson Inc. 2004 ($ millions)
Net income
$
889.77
Number of common shares, millions
294.31
Earnings before interest and tax
$
1,402.30
Tax rate
35.5%
Book value of equity
$
3,218.47
Book value interest-bearing debt
$
1,295.44
Total Sales
$
5,320.45
Total Assets
$
5,483.29
Harley-
Arctic
Polaris
Davidson
Cat
Brunswick
Industries
Comparison of Timberland with Comparab
Growth Rates, Financial Risks, Size,
5-year growth rate in sales (%)
15.5
6.2
4.1
6.1
5-year growth rate in eps (%)
28.1
11.1
47.1
15.9
Interest coverage ratio (x)
60.9
*
8.9
85.1
Total liabilities to assets (%)
0.4
0.3
0.6
0.5
Total assets ($ millions)
5,483
286
4,346
793
Indicators of Value
Price/earnings (x)
16.9
17.8
27.8
MV firm/EBIT(1-tax rate) (x)
17.3
19.4
24.3
MV equity/BV equity (x)
2.8
2.8
8.0
MV firm/BV firm (x)
2.8
2.3
7.7
Price/sales (x)
0.8
0.9
1.6
MV firm/sales (x)
0.8
1.1
1.7

View the Answer

Step 1:
Excluding
Marine innebag
Harley-Davidson:
Products
Industries
Median
Mean
ble Companies:
, Returns
15.5
10.8
6.200
8.540
25.1
17.2
17.200
23.280
*
*
47.000
47.000
0.2
0.5
0.500
0.420
110
395
395.000
1,186.000
28.6
18.6
18.600
21.940
29.0
17.6
19.400
21.520
7.7
6.5
6.500
5.560
7.7
6.5
6.500
5.400
2.7
1.2
1.200
1.440
2.7
1.2
1.200
1.500
^=== Compute the
median and mean
values for Harley-

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