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A company had total revenues of $146 million, operating profit margin of 16%, and depreciation and...

A company had total revenues of $146 million, operating profit margin of 16%, and depreciation and amortization expense of $19 million over the trailing twelve months. The company currently has $31 million in total debt and $15 million in cash and cash equivalents. If the company's market capitalization (market value of its equity) is $507 million, what is its EV/EBITDA ratio? Round to one decimal place.

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Answer #1

Answer :

Operating Profit Margin = EBIT / Total Revenues

0.16 = EBIT / $ 146 million

EBIT = $ 23.36 million

EBITDA = EBIT + Depreciation and Amortization Expense

EBITDA = $ 23.36 million + $ 19 million

EBITDA = $ 42.36 million

Enterprise Value = Market value of debt + Market value of equity - Cash and cash equivalents

Enterprise Value = $ 31 million + $ 507 million - $ 15 million

Enterprise Value = $ 523 million

EV / EBITDA Ratio = Enterprise Value / EBITDA

EV / EBITDA Ratio = $ 523 million / $ 42.36 million

EV / EBITDA Ratio = 12.3

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