Question

You are trying to value a company using the relative valuation approach. Suppose comparable companies are...

You are trying to value a company using the relative valuation approach. Suppose comparable companies are trading at an average trailing EV/EBITDA multiple of 4.0. The company you are valuing generated an EBITDA of $300 million over the last twelve months, has $300 million of debt, $60 million in cash, and 10 million shares outstanding. What is the company's implied share price? Round to one decimal place.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Formula for: Trailing EV/EBITDA multiple = Enterprise Value/Trailing EBITDA

4 = EV/$300 million

EV or Enterprise Value = $1200 million

- Enterprise Value = Market Value of equity + Market Value of Debt - Cash & Cash equivalents

$1200 millions = Market Value of equity + $300 million - $60 million

Market Value of equity= $960 million

- Intrinsic Price per share = Market Value of equity/No of shares outstanding

= $960 million/10 million

Intrinsic Price per share = $96.0

If you need any clarification, you can ask in comments.    

If you like my answer, then please up-vote as it will be motivating

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You try to value a company that had revenues of $49 million throughout the past 12...
You try to value a company that had revenues of $49 million throughout the past 12 months. Depreciation and amortization expenses were $9 million. Operating margin is 25.4%. It has $32 million of debt, $9 million in cash, and 8 million shares outstanding. Comparable companies are trading at an average trailing EV/EBITDA multiple of 22. What is the company's share price using relative valuation? Round to one decimal place.
A company had total revenues of $40 million, operating margin of 36.7%, and depreciation and amortization...
A company had total revenues of $40 million, operating margin of 36.7%, and depreciation and amortization expense of $14 million over the trailing twelve months. The company currently has $287 million in total debt and $76 million in cash and cash equivalents. The company's shares are currently trading at $29.4 per share and there are 19 million shares outstanding. What is its EV/EBITDA ratio? Round to one decimal place.
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following...
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following valuation​ ratios: Comp 1 Comp 2 Comp 3 Comp 4 ​EV/EBITDA 12 11 12.5 10 ​P/E 19 18 20 17 EJH Enterprises has EPS of ​$1.80​, EBITDA of ​$300 ​million, ​$27 million in​ cash, ​$41 million in​ debt, and 100 million shares outstanding. What range of prices is consistent with both sets of​ multiples?
Zeta Group Holdings (Zeta) has three divisions. You have been asked to use valuation multiples of...
Zeta Group Holdings (Zeta) has three divisions. You have been asked to use valuation multiples of comparable companies to value Zeta. You have collected the following information on Zeta’s performance in each division for the most recent year. Division Sales EBITDA Pharmaceuticals $ 1 billion $ 300 million Cosmetics $ 400 million $ 100 million Medical Devices $ 2 billion $ 400 million Zeta currently has $2 billion in debt outstanding and a cash balance of $300 million. There are...
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following...
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following valuation​ ratios: Comp 1 Comp 2 Comp 3 Comp 4 ​EV/EBITDA 12 11 12.5 10 ​P/E 19 18 20 17 EJH Enterprises has EPS of ​$2.00​, EBITDA of ​$300 ​million, ​$28 million in​ cash, ​$45 million in​ debt, and 100 million shares outstanding. What range of prices is consistent with both sets of​ multiples? The range of prices will​ be: Lowest price within both​...
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following...
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following valuation​ ratios: Comp 1 Comp 2 Comp 3 Comp 4 ​EV/EBITDA 12 11 12.5 10 ​P/E 19 18 20 17 EJH Enterprises has EPS of ​$1.80​, EBITDA of ​$300 ​million, ​$27 million in​ cash, ​$41 million in​ debt, and 100 million shares outstanding. What range of prices is consistent with both sets of​ multiples? The range of prices will​ be: Lowest price within both​...
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.
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following...
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following valuation​ ratios: Comp 1 Comp 2 Comp 3 Comp 4 ​EV/EBITDA 12 11 12.5 10 ​P/E 19 18 20 17 EJH Enterprises has EPS of ​$1.80​, EBITDA of ​$290 ​million, ​$30 million in​ cash, ​$40 million in​ debt, and 100 million shares outstanding. What range of prices is consistent with both sets of​ multiples? The range of prices will​ be: Lowest price within both​...
A company generated revenues of $250 million during the last twelve months, with an operating margin...
A company generated revenues of $250 million during the last twelve months, with an operating margin of 37.8% and net margin of 22.2%. Its current market capitalization (equity value) is $543 million and it has 12 million shares outstanding. What's its trailing PE ratio? Round to one decimal place.
A company generated revenues of $292 million during the last twelve months, with an operating margin...
A company generated revenues of $292 million during the last twelve months, with an operating margin of 42.4% and net margin of 27.9%. Its current market capitalization (equity value) is $703 million and it has 13 million shares outstanding. What's its trailing PE ratio? Round to one decimal place.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT