You are trying to value a company using the relative valuation approach. Suppose comparable companies are...

You are trying to value a company using the relative valuation approach. Suppose comparable companies are trading at an average trailing EV/EBITDA multiple of 5.7. The company you are valuing generated an EBITDA of $271 million over the last twelve months, has $386 million of debt, $51 million in cash, and 13 million shares outstanding. What is the company's implied share price? Round to one decimal place.

Expert Solution


Multiplier	5.7
EV/EBITDA	5.7
EBITDA	$ 271.00	million
Enterprise value	5.7*271
Enterprise value	$ 1,544.70	million
Add non-operating assets, cash	51	million
Total value	$ 1,595.70	million
Less debt value	$ (386.00)	million
Value of shares	$ 1,209.70	million
No of shares	13	million
Share price	Value of shares/No of shares
Share price	1209.7/13
Share price	$ 93.1

jeff jeffy answered 3 years ago

What are the advantages of the discounted cash flow (DCF) approach to valuation relative to the...

What are the advantages of the discounted cash flow (DCF) approach to valuation relative to the historical book-value approach? Are there any disadvantages?

Numerous companies are using the value-based pricing approach in establishing their pricing strategies. How would you...

Numerous companies are using the value-based pricing approach in establishing their pricing strategies. How would you define the value-based pricing approach? What are the main differences between the cost-based pricing and the value-based pricing approach?

Discuss the “Comparison” or “Comparable” type of approach to value property and what type of property?

Another way, relative valuation rather than inherent How is using multiples to value a firm similar...

Another way, relative valuation rather than inherent How is using multiples to value a firm similar to valuing a house in the real estate market? What does an Enterprise Value to EBIT value of 5.3 mean? How do you estimate the terminal value of company B using Company C’s multiple of 5.3? be careful using a multiple like the P/E ratio in a DCF analysis because it bases value only on the equity portion (price of equity/earnings per share) (and...

Compare and contrast the valuation of a business using discounted cash flow (DCF) and relative valuation...

Compare and contrast the valuation of a business using discounted cash flow (DCF) and relative valuation (multiples). What elements do you need to know in order to proceed with each methodology? In what cases would you advise against using DCF? Relative valuation? How would a Federal Reserve interest rate increase affect your valuation? Suppose you decided to use DCB. Discuss how you would estimate the risk premium for the company.

Discuss why the two valuation approaches (present value of cash flows and the relative valuation ratios)...

Discuss why the two valuation approaches (present value of cash flows and the relative valuation ratios) are competitive or complementary. 250 words minimum initial p

1. What are the potential shortfalls of using comparable to value a private company? 2. How...

1. What are the potential shortfalls of using comparable to value a private company? 2. How does the concept of fiduciary duty play into the use of preferred stock? 3. Why is vesting used in venture capital deals? Why do managements agree to it?

Describe the asset-based valuation approach, Name and describe the main drivers of a company value, Describe...

Describe the asset-based valuation approach, Name and describe the main drivers of a company value, Describe the advantages and disadvantages of the income-based approach and Describe the main limitations of the market-based valuation approach.?

True or falseIn the framework of relative valuation, if two companies havethe same P/E...

True or falseIn the framework of relative valuation, if two companies have the same P/E ratiosthen both firms will generally have different EV/EBITDA ratios.All else being equal, a company with a large EV/Capital ratio will tend to have a large return on capital (ROC).In the context of relative firm valuation, a company whose cash holdings are equal to $0will have an enterprise value (EV) greater than zero. (Assume total assets are positive.)A firm's EV/EBIT(1-T) ratio will always be greater than...

There are two major approaches to corporate valuation: a) using comparable firms (via multiples, i.e. ratios)...

There are two major approaches to corporate valuation: a) using comparable firms (via multiples, i.e. ratios) and b) discounted cash flows based methods (FCF models, capital budgeting metrics all fall into this category). Based on the case, which method (A or B above) do you find more useful? Briefly discuss relative strengths and weaknesses you can think of for both methods. Answer detailed.

Question