Question

Using the following information about Smudge Inc, calculate the EBITDA multiple. Share price 35.34 Shares outstanding...

Using the following information about Smudge Inc, calculate the EBITDA multiple.

Share price 35.34
Shares outstanding 444,688.0
Noncontrolling interests 78,224.0
Short term debt 12,000.0
Long term debt 40,500.0
Cash and cash equivalents 8,400.0
EPS 1.00
Operating profit 1,784,000.0
EBIT 2,124,600.0
Depreciation 26,500.0
Amortization 19,200.0
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Answer #1

The formula to calculate EBITDA Multiple = Enterprise Value / EBITDA

Let us now calculate the Enterprise Value and EBITDA

Formula for Enterprise Value = (Market capitalization + Value of debt + Minority interest + Preferred shares) – (Cash and Cash equivalents)

Market capitalization = share price * number of outstanding shares = 35.34 *444,688 = 15,715,273.92

Value of debt = short term debt + long term debt = 12,000 + 40,500 = 52,500

Minority interest = Non controlling interest = 78,244

Cash and Cash equivalents = 8,400

Enterprise Value = [15,715,273.92 + 52,500 + 78,244] -8,400 = 15,837,617.92

EBITDA = EBIT + Depreciation + Amortization = 2,124,600 + 26,500 + 19,200 = 2,170,300

EBITDA Multiple = Enterprise Value / EBITDA = 15,837,617.92/ 2,170,300

= 7.297432

EBITDA Multiple =7.3

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