Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Question
Chapter 3, Problem 11QP
Summary Introduction
To calculate: The enterprise value-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple for Company T.
Introduction:
The estimated value of the firm’s operating assets is the enterprise value of the firm. The operating asset includes all the assets except cash.
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Students have asked these similar questions
Question 9:
• Problem
• Amazon Co, Inc (AMZN) has an Enterprise Value of $18.7 billion.
• AMZN’s Enterprise Value to Sales ratio is 0.40 versus 1.65 for peers, while their Enterprise Value to EBITDA ratio is 6.5 versus 15.7 for peers.
• How would AMZN’s Enterprise Value change if the ratios were equal to the average of its peers?
13.EXCEL] Capital intensity ratio: McDonald Metal Works has been able to generate net sales of $13,445,196 on assets of $9,145,633. What is the firm's capital intensity ratio?
15. Use the table for the question(s) below.
Name
Market
Capitalization
Enterprise
Value
Enterprise Enterprise
Price/
P/E
Value/
Value/
Book
($ 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
Chapter 3 Solutions
Fundamentals of Corporate Finance
Ch. 3.1 - Prob. 3.1ACQCh. 3.1 - Prob. 3.1BCQCh. 3.2 - Prob. 3.2ACQCh. 3.2 - Name two types of standardized statements and...Ch. 3.3 - What are the five groups of ratios? Give two or...Ch. 3.3 - Given the total debt ratio, what other two ratios...Ch. 3.3 - Turnover ratios all have one of two figures as the...Ch. 3.3 - Profitability ratios all have the same figure in...Ch. 3.4 - Return on assets, or ROA, can be expressed as the...Ch. 3.4 - Return on equity, or ROE, can be expressed as the...
Ch. 3.5 - Prob. 3.5ACQCh. 3.5 - Prob. 3.5BCQCh. 3.5 - Prob. 3.5CCQCh. 3.5 - Prob. 3.5DCQCh. 3 - Prob. 3.1CTFCh. 3 - Prob. 3.2CTFCh. 3 - What is the correct formula for computing the...Ch. 3 - Prob. 3.5CTFCh. 3 - Current Ratio [LO2] What effect would the...Ch. 3 - Current Ratio and Quick Ratio [LO2] In recent...Ch. 3 - Prob. 3CRCTCh. 3 - Prob. 4CRCTCh. 3 - Prob. 5CRCTCh. 3 - Prob. 6CRCTCh. 3 - Prob. 7CRCTCh. 3 - Prob. 8CRCTCh. 3 - Prob. 9CRCTCh. 3 - Industry-Specific Ratios [LO2] There are many ways...Ch. 3 - Prob. 11CRCTCh. 3 - Prob. 12CRCTCh. 3 - Calculating Liquidity Ratios [LO2] SDJ, Inc., has...Ch. 3 - Calculating Profitability Ratios [LO2] Shelton,...Ch. 3 - Calculating the Average Collection Period [LO2]...Ch. 3 - Calculating Inventory Turnover [LO2] The Green...Ch. 3 - Calculating Leverage Ratios [LO2] Levine, Inc.,...Ch. 3 - Calculating Market Value Ratios [LO2] Makers Corp....Ch. 3 - DuPont Identity [LO4] If Roten Rooters, Inc., has...Ch. 3 - DuPont Identity [LO4] Zombie Corp. has a profit...Ch. 3 - Prob. 9QPCh. 3 - Prob. 10QPCh. 3 - Prob. 11QPCh. 3 - Equity Multiplier and Return on Equity [LO3] SME...Ch. 3 - Just Dew It Corporation reports the following...Ch. 3 - Prob. 14QPCh. 3 - Prob. 15QPCh. 3 - Prob. 16QPCh. 3 - Calculating Financial Ratios [LO2] Based on the...Ch. 3 - Using the DuPont Identity [LO3] Y3K, Inc., has...Ch. 3 - Days Sales in Receivables [LO2] A company has net...Ch. 3 - Ratios and Fixed Assets [LO2] The Caughlin Company...Ch. 3 - Profit Margin [LO4] In response to complaints...Ch. 3 - Return on Equity [LO2] Firm A and Firm B have...Ch. 3 - Calculating the Cash Coverage Ratio [LO2] Ugh...Ch. 3 - Cost of Goods Sold [LO2] W B Corp. has current...Ch. 3 - Prob. 25QPCh. 3 - Some recent financial statements for Smolira Golf...Ch. 3 - DuPont Identity [LO3] Construct the DuPont...Ch. 3 - Prob. 28QPCh. 3 - Market Value Ratios [LO2] Smolira Golf Corp. has...Ch. 3 - Tobins Q [LO2] What is Tobins Q for Smolira Golf?...Ch. 3 - Using the financial statements provided for SS...Ch. 3 - Mark and Todd agree that a ratio analysis can...Ch. 3 - Compare the performance of SS Air to the industry....
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