Question

# SK Enterprises has total assets of \$421,800, outstanding debt of \$129,000, cash of \$18,700, sales of...

SK Enterprises has total assets of \$421,800, outstanding debt of \$129,000, cash of \$18,700, sales of \$387,400, costs of \$241,900, and depreciation of \$31,200. The firm has 11,300 shares of stock priced at \$34.40 a share. What is the firm's EV to EBITDA ratio?

 Selected Answer: Answers: A. 4.27 B. 3.82 C. 4.08 D. 3.43 E. 3.67

Enterprises value (EV) = (Number of shares x Price per share) + Outstanding debt - Cash

= (11,330 x 34.40) + 129,000 - 18,700

= 388,720 + 129,000 - 18,700

= \$499,020

EBITDA = Sales - costs

= 387,400 - 241,900

= \$145,500

EV to EBITDA = Enterprises value (EV)/EBITDA

= 499,020/145,500

= 3.43

Firm's EV to EBITDA ratio = 3.43

Correct option is (D)

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