Question

The market value of the equity of Skipper, Inc., is $720,000. The balance sheet shows $46,400 in cash and $230,700 in debt, while the income statement has EBIT of $103,700 and a total of $166,900 in depreciation and amortization. What is the enterprise value-EBITDA multiple for this company?

Answer 1

Answer:

3.34 times

Explanation:

The market value of skipper incorporation is $720,000

The balance sheet shows a cash of $46,400 and debt of $230,700

The income statement has an EBIT of $103,700

The depreciation and amortization is $166,900

The first step is to calculate the enterprise value

= Market capitalization + debt - cash

= $720,000 + $230,700 - $46,400

= $904,300

The EBITDA can be calculated as follows

= EBIT + depreciation and amortization

= $103,700 + $166,900

= $270,600

Therefore the enterprise value-EBITDA can be calculated as follows

= 904,300/270,600

= 3.34 times