Corporate Finance
Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
Question
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Chapter 2, Problem 38P

a)

Summary Introduction

To determine: Comparison of the market capitalization-to-revenue of Company U and Company S.

Introduction:

The market capitalization-to-revenue is otherwise known as the price to sales ratio. It compares the stock price of the company to its revenue.

The dollar value of a company’s outstanding shares is termed as market capitalization. It is also known as market cap.

b)

Summary Introduction

To determine: Comparison of the enterprise value-to-revenue ratio of Company U and Company S.

Introduction:

The enterprise value of the company is divided by the company’s revenue. This ratio is an expansion of the price-to-sales ratio, where instead of the market capitalization-to-revenue the enterprise value-to-revenue is used.

c)

Summary Introduction

To discuss: The best comparison between Company U and Company S.

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Chapter 2 Solutions

Corporate Finance

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