Question

the market value of the equity of Ginger, Inc., is $710,000. The balance sheet shows $45,600 in cash and $227,800 in debt, while the income statement has EBIT of $102,800 and a total of $164,600 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.) Enterprise value−EBITDA multiple times

Answer 1

Answer:

3.34 times

Explanation:

Ginger incorporation has a market valu of equity of $710,000

The debt is $227,800

Cash is $45,600

EBIT is $102,800

The first step is to find the enterprise value

= market capitalization + debt -cash

= $710,000 +$227,800 - $45,600

= $937,800-$45,600

= $892,200

The EBITDA can be calculated as follows

= EBIT + depreciation and amortization

= $102,800 + $164,600

= $267,400

Therefore the enterprise value-EBITDA can be calculated as follows

= 892,200/267,400

= 3.34 times