Name Market Capitalization Enterprise Value Enterprise Enterprise Price/ P/E Value/ Value/ Book ($ million) ($ million) Sales EBITDA Gannet 6350 10,163 7.36 0.73 1.4 5.04 New York Times 2423 3472 18.09 2.64 1.10 7.21 McClatchy 675 3061 9.76 1.68 1.40 5.64 Media General 326 1192 14.89 0.39 1.31 7.65 Lee Enterprises 267 1724 6.55 0.82 1.57 6.65 Average 11.33 1.25 1.35 6.44 Maximum +60% 112% +16% +22% Minimum -40% -69% -18% -19% The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $600 million, EBITDA of $84 million, excess cash of $68 million, $18 million of debt, and 120 million shares outstanding. If the average enterprise value to sales for comparable businesses is used, which of the following is the best estimate of the firm's share price? A) $6.45 B) $7.20 C) $7.17 D) $7.53

Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter5: Accounting Systems
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15. Use the table for the question(s) below.
Name
Market
Capitalization
Enterprise
Value
Enterprise Enterprise
Price/
P/E
Value/
Value/
Book
($ million) ($ million)
Sales
EBITDA
Gannet
6350
10,163
7.36
0.73
1.4
5.04
New York Times
2423
3472
18.09
2.64
1.10
7.21
McClatchy
675
3061
9.76
1.68
1.40
5.64
Media General
326
1192
14.89
0.39
1.31
7.65
Lee Enterprises
267
1724
6.55 0.82
1.57
6.65
Average
11.33
1.25
1.35
6.44
Maximum
+60% 112%
+16%
+22%
Minimum
-40% -69%
-18%
-19%
The table above shows the stock prices and multiples for a number of firms in the newspaper publishing
industry. Another newspaper publishing firm (not shown) had sales of $600 million, EBITDA of $84
million, excess cash of $68 million, $18 million of debt, and 120 million shares outstanding. If the average
enterprise value to sales for comparable businesses is used, which of the following is the best estimate of
the firm's share price?
A) $6.45
B) $7.20
C) $7.17
D) $7.53
Transcribed Image Text:15. Use the table for the question(s) below. Name Market Capitalization Enterprise Value Enterprise Enterprise Price/ P/E Value/ Value/ Book ($ million) ($ million) Sales EBITDA Gannet 6350 10,163 7.36 0.73 1.4 5.04 New York Times 2423 3472 18.09 2.64 1.10 7.21 McClatchy 675 3061 9.76 1.68 1.40 5.64 Media General 326 1192 14.89 0.39 1.31 7.65 Lee Enterprises 267 1724 6.55 0.82 1.57 6.65 Average 11.33 1.25 1.35 6.44 Maximum +60% 112% +16% +22% Minimum -40% -69% -18% -19% The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $600 million, EBITDA of $84 million, excess cash of $68 million, $18 million of debt, and 120 million shares outstanding. If the average enterprise value to sales for comparable businesses is used, which of the following is the best estimate of the firm's share price? A) $6.45 B) $7.20 C) $7.17 D) $7.53
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