Daniel
It is good to have you on the board.Your analysis is helpful to this situation. I prefer to do "number crunching" analysis on this company rather than to make optimistic or pessimistic comments without support.
I will try to answer your questions
1. NRV refers to the net realizable value of the assets or their estimated selling prices.
Funeral homes are usually sold on a multiple of revenue basis.
The prices for funeral homes in the U.S. have declined from 3 times annual revenue to 2-2.5 times annual revenue this year.
If LWN's funeral homes were sold , they would probably get this price.
Thus the estimated NRV would be :
(millions U.S. Dollars)
630*2-2.5= 1,260-1,575
The cemetary values are lower.
I have calculated the NRV of the cemetaries based on the following data
selling price 193
cost 495
loss 302
selling price / cost = .39
selling price * book value of cemetery per sept 30 98
.39 * 1,475
575
another way to calculate the nrv of the cemetaries would be as a multiple of revenue
selling price of cemetaries / revenue of cemetaries sold
=193/ 114
=1.7
ratio * annual cemetery revenue
1.7 * 408
=694
=1.7* 408
=694
to summarize
nrv of funeral homes 1,260-1,575
nrv of cemetaries 575-694
total nrv 1,835-2,269
long term debt 2,113
shareholder's equity (278) - 156
- preferred equity 75
common equity (353)- 81
thus, if we use a very conservative estimate of the sellling prices
the it would appear that the bonds can be fully paid off,and that there would be little left for the common shareholders
I hope this helps
regards
Demetre |
