Nur Inc., is a private company that designs, manufactures, and distributes branded consumer products. During its most recent fiscal year, the had revenues of $200 million and earnings of $30 million. The company has filed a registration statement with the SEC for its IPO. Before the stock is offered, Nur's investment bankers would like to estimate the value of the company using comparable companies. The investment bankers have assembled the following information based on data for other companies in the same industry that have recently gone public. In each case, the ratios are based on the IPO price. After the IPO, Nur Inc will have 10 million shares outstanding. Estimate the IPO price for Nur Inc using the price/earnings ratio and the price/revenues ratio. Company Ray Products Corp. Byce-Frasier Inc. Fashion Industries Group Recreation International Average Price/Earnings Price/Revenues 18.8 X 19.5 X 24.1 X 22.4 X 21.2 X 1.2 X 0.9 X 0.8 X 0.7 X 0.9 X
Nur Inc., is a private company that designs, manufactures, and distributes branded consumer products. During its most recent fiscal year, the had revenues of $200 million and earnings of $30 million. The company has filed a registration statement with the SEC for its IPO. Before the stock is offered, Nur's investment bankers would like to estimate the value of the company using comparable companies. The investment bankers have assembled the following information based on data for other companies in the same industry that have recently gone public. In each case, the ratios are based on the IPO price. After the IPO, Nur Inc will have 10 million shares outstanding. Estimate the IPO price for Nur Inc using the price/earnings ratio and the price/revenues ratio. Company Ray Products Corp. Byce-Frasier Inc. Fashion Industries Group Recreation International Average Price/Earnings Price/Revenues 18.8 X 19.5 X 24.1 X 22.4 X 21.2 X 1.2 X 0.9 X 0.8 X 0.7 X 0.9 X
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
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Transcribed Image Text:Nur Inc., is a private company that designs, manufactures, and distributes branded consumer
products. During its most recent fiscal year, the had revenues of $200 million and earnings of
$30 million. The company has filed a registration statement with the SEC for its IPO.
Before the stock is offered, Nur's investment bankers would like to estimate the value of the
company using comparable companies. The investment bankers have assembled the following
information based on data for other companies in the same industry that have recently gone
public. In each case, the ratios are based on the IPO price. After the IPO, Nur Inc will have 10
million shares outstanding. Estimate the IPO price for Nur Inc using the price/earnings ratio and
the price/revenues ratio.
Company
Ray Products Corp.
Byce-Frasier Inc.
Fashion Industries Group
Recreation International
Average
Price/Earnings Price/Revenues
18.8 X
19.5 X
24.1 X
22.4 X
21.2 X
1.2 X
0.9 X
0.8 X
0.7 X
0.9 X
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