Question 1. Prepare the pro forma cash flow statements for Bloomington Clinics for five years into the future using the data provided in the case plus the most likely growth estimates.
a. Compute rate should be used in the cash flow analysis?
b. How should variable and fixed operating costs be handled?
Question 2. a. What is the value of the business related to the market multiple method applied to the number of physicians?
b. What assumptions are inherent in this method?
Question 3. a. What is the value of the business according to the market multiple method applied to revenues?
b. What assumptions are inherent in this method?
4. Should all stockholders get the same per share amount if the practice is sold? Describe.
5. How could the analysis change if the acquirer planned to finance half of the acquisition price with debt?