Question

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 ranges, the P/E and EV/EBITDA ranges, is $ nothing. (Round to two decimal places.) Highest price within both ranges, the P/E and the EV/EBITDA ranges, is $ nothing. (Round to two decimal places.)

Answer #1

Multiple Ranges

**Lowest Price
with P/E ranges** = Price with 17.0x = 17.0 * EPS =
17.0 * 1.8 = **$30.60**

**Lowest Price with
EV/EBITDA ranges** = Price with 10.0x

EV = 10.0 * EBITDA = 10 * $290M = $2,900 M

Equity Value = EV - Net Debt = EV - (Debt - Cash) = 2,900 - (40 - 30) = $2,890 M

Price = Equity Value / Shares outstanding = 2890 /100 =
**$28.90**

**Highest Price
with P/E ranges** = Price with 20.0x = 20.0 * EPS =
20.0 * 1.8 = **$36.00**

**Highest Price with
EV/EBITDA ranges** = Price with 12.5x

EV = 12.5 * EBITDA = 12.5 * $290M = $3,650 M

Equity Value = EV - Net Debt = EV - (Debt - Cash) = 3,650 - (40 - 30) = $3,615 M

Price = Equity Value / Shares outstanding = 3615 /100 =
**$36.15**

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million, $27 million in cash, $41 million in debt, and 100
million shares outstanding. What range of prices is consistent with
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within both...

After researching the competitors of EJH Enterprises, you
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Comp 2
Comp 3
Comp 4
EV/EBITDA
12
11
12.5
10
P/E
19
18
20
17
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$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 valuation
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Comp 1
Comp 2
Comp 3
Comp 4
EV/EBITDA
12
11
12.5
10
P/E
19
18
20
17
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determine that most comparable firms have the following valuation
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