FFDP Corp. has yearly sales of $29.5 million and costs of $14.9 million. The com
ID: 2736518 • Letter: F
Question
FFDP Corp. has yearly sales of $29.5 million and costs of $14.9 million. The company’s balance sheet shows debt of $55.5 million and cash of $39.5 million. There are 1,960,000 shares outstanding and the industry EV/EBITDA multiple is 9.0. What is the company’s enterprise value? (Enter your answer in dollars, not millions of dollars. Do not round intermediate calculations and round your answer to the nearest whole number.)
Enterprise value $
What is the stock price per share? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))
Stock price $
Explanation / Answer
Step1: Computation of the EBITDA.We have,
EBITDA = Sales - Cost
EBITDA = 29,500,000 - 14,900,000 = $ 14,600,000
Step2: Computation of the company's enterprise value.We have,
EV/ EBITDA multiple = EV / EBITDA
9 = EV / 14,600,000
EV = $ 131,400,000
Hence, the Company's enterprise value is $ 131,400,000
Step3: Computation of the stock price per share.We have,
Enterprise Value (EV) = Market value of stock + Total Debt – Cash
Market value of stock = Enterprise value + Cash - Total debt
Market value of stock = 131,400,000 +39,500,000 - 55,500,000
Market value of stock = $ 115,400,000
Number of share outstanding = 1,960,000
Stock price per share = Market value of stock / Number of share outstanding
Stock price per share = 115,400,000 / 1,960,000
Stock price per share = $ 58.88
Hence, the stock price per share is $ 58.88
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