Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
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Question
Chapter 19, Problem 1P
Summary Introduction
To determine: The range of EBITDA/sales multiple for Company I.
Introduction:
The primary way to estimate a firm’s value is by valuating the comparables. Multiples that are used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.
Expert Solution & Answer
Answer to Problem 1P
The EBITDA values ranges from $9.075 to $13.875.
Explanation of Solution
Given information:
The current sales are $75 million. Refer to Table 19.2 in Problems 1 in the textbook.
Compute the range of EBITDA:
| Particulars | Firm O | Firm L | Firm N | Industry |
| EBITDA/Sales (A) | 0.17 | 0.185 | 0.159 | 0.121 |
| Sales(B) | $75 | $75 | $75 | $75 |
| EBITDA (A×B) | $12.75 | $13.875 | $11.925 | $9.075 |
Hence, the EBITDA values ranges from $9.075 to $13.875.
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Chapter 19 Solutions
Corporate Finance
Ch. 19.1 - Prob. 1CCCh. 19.1 - Prob. 2CCCh. 19.2 - Prob. 1CCCh. 19.2 - Prob. 2CCCh. 19.3 - What is a pro forma income statement?Ch. 19.3 - Prob. 2CCCh. 19.4 - Prob. 1CCCh. 19.4 - Prob. 2CCCh. 19.5 - Prob. 1CCCh. 19.5 - Prob. 2CC
Ch. 19.6 - Prob. 1CCCh. 19.6 - Prob. 2CCCh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Prob. 5PCh. 19 - Prob. 6PCh. 19 - Prob. 7PCh. 19 - Prob. 8PCh. 19 - Prob. 11PCh. 19 - Calculate Idekos unlevered cost of capital when...Ch. 19 - Prob. 13PCh. 19 - Prob. 14PCh. 19 - Prob. 15PCh. 19 - Prob. 16P
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