Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

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on those obligations. This valuation also does not factor in the growth rate of thecorporation which has been a steady 3% per year.The Book Value of this firm is $13.67, and the market price of the firm is $38.39.Long Run Average Residual Income PerpetuityDerived Value as of April 1, 2005= $44.82Po= BVEo+ (BVEo(ROE-Ke))/(Ke-g)Po= 13.67+ 0.7600520.0244Po= 13.67 31.14967Po= 44.81967The Long Run Average RI Perpetuity model shows the estimated value of thecompany being $44.82 per share. According to the actual value of $38.41, thefirm is undervalued by $6.41. With our Ke being 5.44% and our growth of 3%,this increases the estimated value per share. With a book value of 13.67, andROE of 11%, this concludes how the valuation is estimated.Conclusion to Valuation MethodsFrom our valuations, and the information that we had available for use in derivingtheir capital structure, the Abnormal earnings growth model was the best valuation forPolo Ralph Lauren due to the continued growth of the firm and the steady growth of theearnings. We feel that with these valuations Polo Ralph Lauren is a fairly valued firm.Despite the fact that it failed to supply us with the accounting data that we needed toproperly value their capital structure.36
References• http://www.finance.yahoo.com/q?s=rl• http://www.marketguide.com• http://www.polo.com/investorrelations• Polo Ralph Lauren Co. 2004 10K filing37
Page 1 and 2: Business Valuation of Polo Ralph La
Page 3 and 4: Executive SummaryThe objective of t
Page 5 and 6: Industry Overview and Analysis.Comp
Page 7 and 8: Products and Services:Polo Ralph La
Page 9 and 10: Company-operated a total of 3,022 s
Page 11 and 12: Ralph Lauren lifestyle through new
Page 13 and 14: Lauren must remain a respected inno
Page 15: Net Accounts ReceivableA reserve fo
Page 18 and 19: offset by the increase in selling s
Page 20 and 21: Evaluation of the Quality of Disclo
Page 22 and 23: Ratio Analysis of Polo Ralph Lauren
Page 24 and 25: for the company. The Times Interest
Page 26 and 27: average of this ratio, with the exc
Page 28 and 29: (In millions of dollars)Annual Bala
Page 30 and 31: Based on the Comparable forward P/E
Page 32 and 33: occurred because their Book Value a
Page 34 and 35: Sensitivity Analysisg0 0.02 0.03 0.
Page 38 and 39: AppendixCross Sectional (Benchmark)
Page 40 and 41: Net Profit Margin 4/3/2004 3/29/200
Page 42 and 43: Return on Equity (ROE) 4/3/2004 3/2
Page 44 and 45: Quick Ratio 4/3/2004 3/29/2003 3/30
Page 46 and 47: Discounted Dividends (Amounts in mi
Page 48: Residual Income 1 2 3 4 5 6 7 8 9 1
Page 51 and 52: 51Polo Ralph Lauren Corp.As Reporte
Page 54 and 55: 54Polo Ralph Lauren Corp.As Reporte

Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

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