A company had total revenues of $71 million, operating margin of32.1%, and depreciation and amortization...

A company had total revenues of $71 million, operating margin of 32.1%, and depreciation and amortization expense of $23 million over the trailing twelve months. The company currently has $235 million in total debt and $47 million in cash and cash equivalents. The company's shares are currently trading at $29 per share and there are 11 million shares outstanding. What is its EV/EBITDA ratio? Round to one decimal place.

Expert Solution

EV/EBITDA ratio is computed as follows:

EBITDA is computed as follows:

= (Total revenues x operating margin) + depreciation and amortization

= ($ 71 million x 32.1%) + $ 23 million

= $ 45.791 million

EV is computed as follows:

= (Price per share x Number of shares) + value of debt - cash

= $ 29 x 11 million + $ 235 million - $ 47 million

= $ 507 million

So, the ratio will be as follows:

= $ 507 million / $ 45.791 million

= 11.1 Approximately

jeff jeffy answered 2 years ago

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