Time Limit 01:30:00 Submit his Question: 1 pt 2 of 5 This Quiz: 5 pts poss uppos

Question

Time Limit 01:30:00 Submit his Question: 1 pt 2 of 5 This Quiz: 5 pts poss uppose Rocky Brands has earmings per share of $2.17 and EBITDA of $30.8 milion. The frm also has 5.7 miion shares outstanding and dect of $130 milion (net of cash) You believe Deckens Outdoor Coporation is comparable to Rocky Brands in terms of its underlying business, but Deckers has no debt. If Deckers has a PIE of 136 and an using both multiples. Which estimate is likely to be more accurate? enterprise value to EBITDA muitiple of 7 6, estimate the vatue of Rocky Brands stock Which estimate is kely to be more accurate? (Select from the drop-down menu.) Erterprise Valut t0 EBITDA raio P IE ratio 2

Explanation / Answer

1. P/E Ratio = Price/ EPS

13.6 = Price/ 2.17

Price = 29.51

Value of stock = 29.51* 5.7 million

= $ 168.2 million.

2. EV/ EBITDA ratio = 7.6

7.6 = EV/ 30.8

EV = 234.08

Value of stock = 234.08 - 130 worth of debt

= $104.1 million

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