Company Price/Earnings Price/Revenues Ray Products Corp. 18.8 × 1.2 × Byce-Frasier Inc. 19.5 × 0.9 × Fashion Industries Group 24.1 × 0.8 × Recreation International 22.4 × 0.7 × Average 21.2 × 0.9 × Supposed a privately owned firm has revenues of $400 million and earnings of $50 million. The firm has just filed a registration statement with the SEC for its IPO. After the IPO, the firm will have 50 million shares outstanding. Task: Based on the average indurty P/E ratio and price/revenue ratio estimate the IPO price of this firm's stock.
Company Price/Earnings Price/Revenues Ray Products Corp. 18.8 × 1.2 × Byce-Frasier Inc. 19.5 × 0.9 × Fashion Industries Group 24.1 × 0.8 × Recreation International 22.4 × 0.7 × Average 21.2 × 0.9 × Supposed a privately owned firm has revenues of $400 million and earnings of $50 million. The firm has just filed a registration statement with the SEC for its IPO. After the IPO, the firm will have 50 million shares outstanding. Task: Based on the average indurty P/E ratio and price/revenue ratio estimate the IPO price of this firm's stock.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
|
Company |
Price/Earnings |
Price/Revenues |
|
Ray Products Corp. |
18.8 × |
1.2 × |
|
Byce-Frasier Inc. |
19.5 × |
0.9 × |
|
Fashion Industries Group |
24.1 × |
0.8 × |
|
Recreation International |
22.4 × |
0.7 × |
|
Average |
21.2 × |
0.9 × |
Supposed a privately owned firm has revenues of $400 million and earnings of $50 million. The firm has just filed a registration statement with the SEC for its IPO. After the IPO, the firm will have 50 million shares outstanding.
Task: Based on the average indurty P/E ratio and price/revenue ratio estimate the IPO price of this firm's stock.
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