Spreadsheet | Balance Sheet 1987- 1991Income Statement 1987- 1991Same Production and Increased ProductionFree Cash Flows ( In thousands)Present Value of Future Cash FlowsIntrinsic Value of the firm | | |
Abstract | Daniel Dobbins carried on his family tradition of beverage manufacture and started distilling whiskey in 1880. Lately, in 1973 David Dobbins took over as COO of the company and nearly doubles sales revenue during next 10 years. Recently, in order to capture a larger market share of whiskey consumption, a decision was made to expand production to try at a board meeting in December 1987. Hence, the board had decided to increase the production of bourbon in 1988 by 50% in order to meet the demand for straight bourbon whiskey. Consequently, Daniel Dobbins Distillery reported a loss of $814,000. David Dobbins along with managers are pondering whether they should submit the 1988 financial statements to the Ridgeview National Bank of Nashville,, Tennessee in support of a recent loan request for $3 million. The discussion among the managers revolved principally around the method of accounting should be used to for the treatment of various expenses reported in “other costs” section of the operating income statement. In order to remain solvent, the company needed an additional working capital immediately. Hence, a decision had to be reached on these matters quickly. | | |
No of Words | 1684 | | |
Questions Covered | 1. Is Dobbins using LIFO or FIFO? Which should it use?2. Please provide a uFCFF and Intrinsic Firm Value for Dobbins: a. As if it had not increased production; and b. Given its increases in production.3. In your opinion, what costs should be included in Dobbins's