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You are given the following information: Stockholders' equity as reported on the firm’s balance sheet =...

You are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $3 billion, price/earnings ratio = 11, common shares outstanding = 140 million, and market/book ratio = 2.3. The firm's market value of total debt is $6 billion, the firm has cash and equivalents totaling $250 million, and the firm's EBITDA equals $3 billion. What is the price of a share of the company's common stock? Do not round intermediate calculations. Round your answer to the nearest cent.

$  

What is the firm's EV/EBITDA? Do not round intermediate calculations. Round your answer to two decimal places.

Solutions

Expert Solution

price per share = (stockholders equity * market to book ratio) / shares outstanding

price per share = ($3 billion * 2.3) / 140 million

price per share = $49.29

EV = (stockholders equity * market to book ratio) + debt - cash

EV = ($3 billion * 2.3) + $6 billion - $250 million

EV = $12.65 billion

EV/EBITDA =  $12.65 billion / $3 billion

EV/EBITDA = 4.22

jeff jeffy answered 2 years ago
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