FFDP Corp. has yearly sales of $28.8 million and costs of $13.5 million. The com
ID: 2384344 • Letter: F
Question
FFDP Corp. has yearly sales of $28.8 million and costs of $13.5 million. The company’s balance sheet shows debt of $54.8 million and cash of $38.8 million. There are 1,960,000 shares outstanding and the industry EV/EBITDA multiple is 8.3.
rev: 14_12_2013_QC_42698
FFDP Corp. has yearly sales of $28.8 million and costs of $13.5 million. The company’s balance sheet shows debt of $54.8 million and cash of $38.8 million. There are 1,960,000 shares outstanding and the industry EV/EBITDA multiple is 8.3.
Explanation / Answer
Caclualtion of company’s enterprise value:
Earning before tax interest and depreciation (EBTIDA) = Sales -Costs = 28.8 - 13.5 = $15.3 Million
Given that : Enterprise value (EV) / EBTIDA = 8.3
hence , Enterprise value (EV) = 8.3 * EBTIDA
Enterprise value (EV) = 8.3 * 15.3 = $126.99 Million
Calculation of Stock price :
Stock price = EV / number of shares
= 126.99 *(1000000) / 1960000
= $64.79
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