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say as on 31. 03.20 for abc ltd market capitalisation $80000. debt $30000. Preference share $15000....

say as on 31. 03.20 for abc ltd market capitalisation $80000. debt $30000. Preference share $15000. Cash balance $5000.

noof outstanding share 1000 and sales is $40000, if as on 31.03.21 sales is expected to be $50000 and debt preference share and cash balance are expected to remain same then what would be the expected price of its share. calculate using sales multiplier

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Answer #1
1] Sales multiplier = Market capitalization/Total sales
2] Sales multiplier for year ended 31.03.2020 = 80000/40000 = 2.00
3] Expected market capitalization for the year ended 31.03.2021 = 50000*2 = $ 100,000
4] Equity value = 100000+5000-30000-15000 = $          60,000
5] Expected price per share = 60000/1000 = $            60.00
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