3) Which of the following adjustments to net income is NOT correct if you are tr

Question

3) Which of the following adjustments to net income is NOT correct if you are trying to calculate cash flow from operating activities? A) Add back depreciation B) Add increases in accounts payable C) Add increases in accountsreceivable D) Deduct increases in inventory Use the follouwing information for Question 4 belouo In November 2009, Perrigo Co. (PRGO) had a share price of S39.20. They had 91.33 million shares outstanding, a market-to-book ratio of 3.76. In addition, PRGO had S845.01 million in outstanding debt, $163.82 million in net income, and cash of $257.09 mllin 4) Perrigo's enterprise value is closest to: A) S952.16 million B) $3580.14 milion C) $4168.06 million D) $4425.15 million

Explanation / Answer

1.

Answer : C. add: increase in accounts receivable

deduct Increase in current assets and deduct decrease in current liabilities.

2.

Answer : C. $4168.06 millions

Enterprise value = market value of equity + Debt - Cash

= (91.33 shares * $39.20 ) + $163.82 - $257.09

= $4168.06 million.

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