Considering that the average market P/E is twenty times profit, is the previous P/E too demanding? Why? Year Free Cash Flow EBIDTA Net Profit Net Financial 2019 -25 5 807 96 2020 -81 8 1542 101 2021 32 62 1876 139 2022 36 85 919 125 2023 58 143 2355 117

Considering that the average market P/E is twenty times profit, is the previous P/E too demanding? Why? Year Free Cash Flow EBIDTA Net Profit Net Financial 2019 -25 5 807 96 2020 -81 8 1542 101 2021 32 62 1876 139 2022 36 85 919 125 2023 58 143 2355 117

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 25SP: Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site....

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Question

Considering that the average market P/E is twenty times profit, is the previous P/E too demanding? Why?
Year Free Cash Flow EBIDTA Net Profit Net Financial

2019 -25 5 807 96

2020 -81 8 1542 101

2021 32 62 1876 139

2022 36 85 919 125

2023 58 143 2355 117

Definition Definition Cash that is left over after a company has paid for its operating and capital expenses. Unlike net income or earnings, free cash flow excludes non-cash expenses of the income statement and includes the expenditures on equipment and assets. Free cash flow also helps potential shareholders to evaluate how quickly the company can pay interest and dividends.

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