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Oxford Childtime

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FINN4233, Financial Policy and Planning

EXAM 2 TAKE-HOME QUESTION

This question is due by 2:00PM on Friday , March 26, 2004. No late submissions will be considered for a grade!
Students are not allowed to discuss the exam with their classmates, colleagues, friends, internet buddies, etc. prior to the submission!! The submitted answers must be your own work.
Show all your work for partial credit.

Important: As future financial economists, analysts, captains of industries, etc., you must be able to present your results in a clean, concise, and understandable manner. Therefore, it is your responsibility to make sure that I understand the way you interpret your work, logic, etc. Unreadable and/or unclear work will be awarded with zero points. All answers should by TYPED.
Good luck!

Prepare a (typed) report on valuation of Oxford Learning Centres (OLC) utilizing the data from the case “Oxford Learning Centres Inc.: The Childtime Alternative”. Address all of the following questions (attempt to structure your analysis to specifically answer each of the questions, one after another). (Since I want to make your life a little easier, note that the end of this document contains electronic copies of the most important case exhibits, as well as one extra Exhibit A (containing data on most recent acquisitions in the supplemental education industry):

a) Is this a good time for Mr. Whitehead to sell a significant stake of OLC to Childtime? How did OLC perform in the recent past? (You may want to analyze the following factors using data in Exhibits 2 and 3: liquidity (using current assets/current liabilities ratio), various efficiency ratios (CAPEX/Sales, Costs/Sales, Working Capital/Sales), profitability (growth in revenues, growth in EBITDA, growth in Net Income, Return on Equity (Net Income/Net Worth), Return on Assets). As a potential investor, what is your

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