Case Study: Our Toys: A Case in Small Business Simulation

Document Type

Article

Publication Date

Fall 2006

Publication Title

Journal of Financial Education

Abstract

This case involves the valuation of a small business using techniques taught in most corporate finance courses. The business is Our Toys, a real-world local retail toy store located in a mountainous resort town in New England. This case provides a window into real-world valuation issues such as incomplete accounting data, the impact of a recession, and the disentanglement of cash flows from continuing/discontinuing operations. Discounted cash flow valuation techniques are stressed with involved discussions on cash flow estimation and discount rates taking center stage. Students working on this case will come to appreciate the usefulness of accounting data, the subjective nature of business valuation, and the power of a business education to carry out a comprehensive review of a business strategy for valuation purposes.

Comments

Journal of Financial Education © 2006 Financial Education Association

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