Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 139 views

    LLC No 2

    Uploaded by

    dika
    The document summarizes the stock market valuations of Ubid and Creative Computers as of December 9 based on their stock prices and number of outstanding shares. Ubid's market valuation of $326 million far exceeds its total assets of $6 million, suggesting it is overvalued. Creative Computer's market valuation of $232 million does not reflect its total assets of $142 million or that it will distribute the remaining 80% of Ubid shares to its own shareholders, suggesting it is undervalued relative to Ubid. Both valuations seem unreasonable given the actual assets of each company.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    LLC No 2

    Uploaded by

    dika
    139 views2 pages
    The document summarizes the stock market valuations of Ubid and Creative Computers as of December 9 based on their stock prices and number of outstanding shares. Ubid's market valuation of $326 million far exceeds its total assets of $6 million, suggesting it is overvalued. Creative Computer's market valuation of $232 million does not reflect its total assets of $142 million or that it will distribute the remaining 80% of Ubid shares to its own shareholders, suggesting it is undervalued relative to Ubid. Both valuations seem unreasonable given the actual assets of each company.

    Original Description:

    Answer LLC

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document summarizes the stock market valuations of Ubid and Creative Computers as of December 9 based on their stock prices and number of outstanding shares. Ubid's market valuation of $326 million far exceeds its total assets of $6 million, suggesting it is overvalued. Creative Computer's market valuation of $232 million does not reflect its total assets of $142 million or that it will distribute the remaining 80% of Ubid shares to its own shareholders, suggesting it is undervalued relative to Ubid. Both valuations seem unreasonable given the actual assets of each company.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    139 views2 pages

    LLC No 2

    Uploaded by

    dika
    The document summarizes the stock market valuations of Ubid and Creative Computers as of December 9 based on their stock prices and number of outstanding shares. Ubid's market valuation of $326 million far exceeds its total assets of $6 million, suggesting it is overvalued. Creative Computer's market valuation of $232 million does not reflect its total assets of $142 million or that it will distribute the remaining 80% of Ubid shares to its own shareholders, suggesting it is undervalued relative to Ubid. Both valuations seem unreasonable given the actual assets of each company.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    2.

    What is the current stock market valuation of Creative Computers and of Ubid based on the stock
    prices as of December 9? As stock market valuation reflects assets in place plus growth opportunities,
    estimate the market’s assessment of the growth opportunities of each firm. (Remember that balance
    sheets have to balance). Are these assessments reasonable?
    Untuk menghitung current stock market valuation maka menggunakan harga saham pada 9
    Desember 1998 dikali dengan number of shares outstanding pada 9 Desember 1998 maka hasil yang
    didapatkan berikut ini:
    Ubid Market Valuation = ( $35.6875 per share ) x ( 9,146,883 shares )
    = $326,429,387
    Creative Computers Valuation = ( $22.75 per share ) x ( 10,238,703 )

    = $232,930,493

    The current stock market valuation of Ubid is roughly $326,541,000. Creative Computers has a market
    valuation that is actually less than Ubid and less than Creative Computers’ ownership of Ubid
    (~$261,233,000) and is roughly $232,930,000. Ubid’s market valuation creates a goodwill account that is
    about 98% of its total assets, and Creative Computers has an investment in Ubid that makes up 56% of
    its total assets. This makes Ubid detrimentally risky to its equity holders (there’s nothing to liquidate to
    pay them if Ubid goes into bankruptcy) and puts Creative Computers in a position that is highly
    dependent on Ubid’s performance.

    The market valuations of both Ubid and Creative Computers seem very unreasonable with
    respect to the assets associated with each firm. The total assets of Ubid is only $6,048,000 and
    does not nearly reflect the extremely high valuation that the market has given it. For this reason,
    a rationale investor might be led to believe that Ubid is overvalued.

    Creative Computers has $142,831,000 in total assets on its balance sheet. Additionally, the case
    states that Creative Computers has promised to distribute the remaining 80% of Ubid to the
    shareholders of Creative Computers six months after the IPO of Ubid. For this reason, the stock
    price of Creative Computers should be higher and certainly doesn’t reflect the total assets of the
    firm and the pending retrieval of 80% of the remaining Ubid shares. Creative Computers should
    have a market capitalization that is 4x larger than Ubid without even accounting for Creative
    Computers other assets. Instead, Ubid shares were selling at a large premium to Creative
    Computers shares. For this reason, a rationale investor might view Creative Computers shares as
    undervalued.
    Valuasi pasar dari kedua Ubid dan Komputer Kreatif tampaknya sangat tidak masuk akal berkenaan
    dengan aset yang terkait dengan masing-masing perusahaan. Total aset Ubid hanya $ 6,048,000 dan
    hampir tidak mencerminkan valuasi yang sangat tinggi yang diberikan pasar. Untuk alasan ini, seorang
    investor rasional mungkin dituntun untuk percaya bahwa Ubid dinilai terlalu tinggi.
    Komputer Kreatif memiliki $ 142.831.000 dalam total aset pada neraca keuangannya. Selain itu, kasus
    tersebut menyatakan bahwa Komputer Kreatif telah berjanji untuk mendistribusikan 80% sisanya dari
    Ubid kepada pemegang saham Creative Computers enam bulan setelah IPO Ubid. Karena alasan ini,
    harga saham Komputer Kreatif harus lebih tinggi dan tentu saja tidak mencerminkan total aset
    perusahaan dan pengambilan tertunda 80% dari saham Ubid yang tersisa. Komputer Kreatif harus
    memiliki kapitalisasi pasar yang 4x lebih besar dari Ubid tanpa memperhitungkan Aset Komputer Kreatif
    lainnya. Sebaliknya, saham-saham Ubid dijual dengan harga besar untuk saham Creative Computers.
    Untuk alasan ini, seorang investor rasional mungkin melihat saham Creative Computers sebagai
    undervalued.

    You might also like