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Mod XI

Mod XI. Luke Friedman. Industry Definition. Comprised of companies that sell products through “non-store” channels, including catalogs, online sales, television, and radio Products and services are delivered through the mail

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Mod XI

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  1. Mod XI Luke Friedman

  2. Industry Definition • Comprised of companies that sell products through “non-store” channels, including catalogs, online sales, television, and radio • Products and services are delivered through the mail • Companies in this industry typically have low amounts of inventory and commonly act as the “middle-man” in sales transactions

  3. Adjusting Enterprise Operations

  4. Purpose • More Granular Income Statement & Balance Sheet • Better distinction between enterprise and operating and financing activities • Better ability to forecast • Applicable Topics • LIFO • Operating Leases • ESO

  5. LIFO • Records inventory under both FIFO and LIFO • LIFO reserve for B&N College is not material and therefore not disclosed • unable to convert

  6. Operating Leases • Large dollar amount for B&N • Issue: IRRUsed adjusted Rd

  7. Lease Computation

  8. Balance Sheet adjustment

  9. Income Statement Adjustment

  10. ESO

  11. ESO

  12. Balance Sheet adjustment

  13. Income Statement Adjustment

  14. Assumption Change

  15. Conclusion and Q&A • Observations • IRR • Substantial change in Rdebt • Force A Change in Assumptions • Decline in total enterprise value as result of decline in EATO • Why Adjusted Assumptions • Sole Survivorwill not perpetually liquidate • Demand for hard-cover books • No analyst sell recommendations • ???

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