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 $367M and earnings of $27M. 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 27.08 and 0.64 respectively. Estimate the IPO price for Detox Company using the MV/Revenues ratio and assuming that they will issue 21M shares.
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Expert Solution
Detox Company market value using the MV/Revenues ratio
= MV/Revenues ratio* Detox revenues
=0.64*367
=234.88 million
the IPO price for Detox Company=234.88/21=11.18
jeff jeffy answered 2 years agoRelated Solutions
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