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 $404M and earnings of $18M. 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 30.62 and 0.85 respectively. Estimate the IPO price for Detox Company using the MV/Earnings ratio and assuming that they will issue 22M shares.
Solutions
Expert Solution
Total market value of company= (market value / earning)
(30.62*18)= market value
=551.16
Initial public offering price= (total market value / number of shares)= (551.16/22)= $ 25.05
jeff jeffy answered 2 years agoRelated Solutions
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