Extracts from the financial statements of Bluebell Co, a listed company, are as follows:
$m
Profit before interest and tax 238
Finance costs (24)
–––––
Profit before tax 214
Corporation tax (64)
–––––
Profit after tax 150
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$m
Assets
Non?current assets
Property, plant and equipment 768
Goodwill (internally generated) 105
–––––
873
–––––
Current assets
Inventories 285
Trade receivables 192
–––––
477
–––––
Total assets 1,350
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Equity and liabilities
Total equity 688
Non?current liabilities
Long?term borrowings 250
Current liabilities
Trade payables 312
Short?term borrowings 100
–––––
Total current liabilities 412
–––––
Total liabilities 662
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Total equity and liabilities 1,350
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A similar size competitor company has a price/earnings ratio of 12.5 times.
This competitor believes that if Bluebell Co were liquidated, property, plant and equipment
would only realise $600m, while 10% of trade receivables would be irrecoverable and
inventory would be sold at $30m less than its book value.
Separately, Bluebell Co is considering the acquisition of Dandelion Co, an unlisted company
which is a supplier of Bluebell Co.
What is the value of Bluebell Co on a net realisable value basis?
A $140.8 million
B $470.8 million
C $365.8 million
D $1,027.8 million
I got the option B as the answer which is wrong. Can you show me the calculations .