Question

In: Finance

1. Complete this sentence: "A company’s enterprise value is equal to _________ _________ value, plus ________...

1. Complete this sentence: "A company’s enterprise value is equal to _________ _________ value, plus ________ financial liabilities".

a)      the sum of ; all assets ; net

b)      total asset ; plus cash ; current

c)      the sum of ; equity ; net

d)      total asset ; equity ; current

e)      the sum of ; equity ; all

2. Which of the following statements are correct with respect to the market value of equity (MVE)? There may be more than one correct answer to this question.

a)      MVE is equal to the sum between enterprise value and net financial liabilities

b)      MVE is the same as shareholders’ funds in a company’s balance sheet

c)      MVE can be calculated as the company’s share price multiplied by the number of shares outstanding

d)      MVE is equal to enterprise value less net financial liabilities

3. Among the following statements about valuation multiple, only 3 are correct. Identify which ones.

a)      The price earnings ratio analysis compares the enterprise value of a company to its EBITDA

b)      The price earnings ratio analysis compares the enterprise value of a company to its net income

c)      The price earnings ratio analysis compares the market value of equity of a company to its net income

d)      The price earnings ratio analysis compares the share price to the earnings per share

e)      The price earnings ratio analysis provides an indication as to the expected growth in earnings per share

4. Which of the following statements are correct with respect to the discounted cash flow (DCF) analysis? There may be more than one correct answer to this question.

a)      The DCF analysis relies upon discounting projected unlevered free cash flows to estimate the enterprise value of a company

b)      The DCF analysis relies upon discounting projected company’s cash flows to estimate the market value of equity of a company

c)      The DCF analysis only considers a defined projection period

d)      The DCF analysis considers a defined projection period as well as a terminal value

Solutions

Expert Solution

1. Complete this sentence: "A company’s enterprise value is equal to _________ _________ value, plus ________ financial liabilities".
c)      the sum of ; equity ; net
2. Which of the following statements are correct with respect to the market value of equity (MVE)? There may be more than one correct answer to this question.
c)      MVE can be calculated as the company’s share price multiplied by the number of shares outstanding
d)      MVE is equal to enterprise value less net financial liabilities
3. Among the following statements about valuation multiple, only 3 are correct. Identify which ones.
c)      The price earnings ratio analysis compares the market value of equity of a company to its net income
d)      The price earnings ratio analysis compares the share price to the earnings per share
e)      The price earnings ratio analysis provides an indication as to the expected growth in earnings per share
4. Which of the following statements are correct with respect to the discounted cash flow (DCF) analysis? There may be more than one correct answer to this question.
a)      The DCF analysis relies upon discounting projected unlevered free cash flows to estimate the enterprise value of a company
d)      The DCF analysis considers a defined projection period as well as a terminal value

jeff jeffy answered 2 years ago
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