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Home / Questions / Helen Campbell and several business friends are considering buying Lewin Foods Inc., a privately...

Helen Campbell and several business friends are considering buying Lewin Foods Inc., a privately...

Helen Campbell and several business friends are considering buying Lewin Foods Inc., a privately owned company. Helen has just received the financial statements from the present owner and is trying to calculate the bid that should be made to the owners of the company. Helen realized that the financial statements were not providing enough information to make a decision. So she hired several real estate agents, engineers, and accountants to help her determine the value of the land, machinery, equipment, and working capital. Lewin Foods Inc.’s statement of income and statement of financial position are as follows: Lewin Foods Inc. Statement of Income For the year ended December 31, 2013 (in $)  Although the company is generating $508,000 in profit and $608,000 in cash flow, Helen and her team believe they could increase revenue substantially and reduce costs. After much deliberation, the management team estimates that it could increase the profit for the year to $850,000 and cash flow to $975,000. Lewin Foods Inc. Statement of Financial Position As at December 31, 2013 (in $)  The consultants and auditors reported to Helen that the trade receivables are worth $650,000, or about 85% of what is currently shown on the company’s statement of financial position. The value of the inventories, however, is not as good. The auditors indicated that only $800,000 would be worth buying, which represents 67% of what is shown on Lewin’s statement of financial position. Hel

 

Apr 30 2020 View more View Less

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