In this model, Fiat is the parent company of Ferrari. It's looking to realize value from Ferrari. There are a number of steps that Fiat wants to take with Ferrari. We're gonna be focusing on the first one here. It says if firstly Fiat is looking to IPO a minority stake in Ferrari. If we look down, we can see step one IPO, we've got the details of it. The offer price is 52. The number of shares sold is 18.9, 10% of Ferrari's to be sold and the cash sale proceeds will be used for reinvestment.

So let's go and update the balance sheets.

Initially we've got the Fiat group balance sheet here. Now important to realize that includes Ferrari already, but we're given Ferrari's standalone figures in case they're useful. We'll then make some adjustments and then calculate Fiats post IPO balance sheet. So that's step one.

Let's start by coming up with fit's post IPO column first. Then we'll put the adjustments and see that they work. Let's start in cache and we'll start off with fit's initial cache figure and we'll add on any adjustments.

I'm gonna copy that same formula down so it's in line with any of the blue figures And any subtotals. I'm going to copy across because they sum vertically.

Great. And we'll just check that it does balance before we get going on those adjustments. So what adjustments do we need to make in step one? Well, it's the IPO proceeds that we need to have come through. So that will first of all go through to cash, but there'll be a second effect of that transaction because we've now got some external shareholders to one of our subsidiaries. That means we create a non-controlling interest or an NCI that will be shown near the bottom of the balance sheet in the equity section. So let's calculate those cash proceeds for scroll up to step one. We had an offer price of 52 and I'm going to multiply that by the number of share sold 18.9. So we've got cash proceeds of 908 2 0.8. The one thing left to do is NCI. If we scroll all the way down, here it is, we're going to use the percentage of net assets method. So I'm going to take my total assets, subtract off my total liabilities, that gets me my net assets and I'm now gonna times that by the 10% that we're IPOing. So my NCI is valued as percentage of net assets, ten seven net assets 247.8. However, we've received a lot more than that. We've received 982.8, therefore we must have made a gain. We're going to put that through to total shareholders equity. So I take the 982, subtract out the NCI and we've now got 735 as that extra equity.