Question

The market value of the equity of Hudgins, Inc., is $645,000. The balance sheet shows $53,000 in cash and $215,000 in debt, while the income statement has EBIT of $91,000 and a total of $157,000 in depreciation and amortization. What is the enterprise value-EBITDA multiple for this company? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

It is 3.25 times

Explanation:

EBITDA Multiple = Enterprise Value/ EBITDA

Where EBITDA =  EBIT+Depreciation & Amortization

              =  $91,000+$157,000

              =$248,000

Enterprise Value (EV) =  Market value of the equity +Debt-Cash and Cash Equivalent

EV= $645,000+$215,000-$53,000

    =$807,000

Hence, EBITDA Multiple = $807,000/$248,000

                                        =3.25 times

EBITDA Multiple is used to compares a company’s Enterprise Value to its annual EBITDA.

Answer 2

Answer: 1,000,000

Explanation: