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EV / EBITDA multiple = 9.0X Topline growth = 0.8% Describe this metric in relation to...

EV / EBITDA multiple = 9.0X

Topline growth = 0.8%

Describe this metric in relation to the apparel sector average of 10.9X. Does this discount or premium appear to be supported by the company’s recent topline growth experience? Explain.

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Answer #1

Top-line growth is reflecting the overall revenue growth of the entire sector and Enterprise value to the EBITDA is reflecting that the overall enterprise value of a company is (9 times) in this case of top-line growth so it is appearing at a discount becausethe entire sector average is 10.9 times so it is trading at a lower multiple.

It can be said that the company should have been earning more in order to to maintain the valuation in respect to the overall industry but the company is provided with a higher valuation in respect to the industry with a low earning and top line growth.I would be advocating the company to increase its top line growth and its bottom line growth in order to match the industry multiple

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