Question
In: Finance
Company Detox, is a private company that designs, manufactures and distributes certain consumer products. In this...
Company Detox, is a private company that designs, manufactures and distributes certain consumer products. In this fiscal year, Detox had revenues of $364M and earnings of $29M. Detox company has filed a registration statement with the SEC for its IPO. If the industry average MV/Earnings ratio and MV/Revenues ratio for the recent fiscal year were 20.19 and 0.59 respectively. Estimate the IPO price for Detox Company using the MV/Earnings ratio and assuming that they will issue 20M shares.
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Expert Solution
Detox Company market value
=MV/Earnings ratio*earnings
=20.19*29
=585.51 million
the IPO price for Detox Company
=Detox Company market value/number of shares
=585.51/20
=29.28
jeff jeffy answered 2 years agoRelated Solutions
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