EV/EBITDA multiples can be used to benchmark or determine the potential acquisition price (where Enterprise Value= Net Debt + Market Equity Value). What is the implied enterprise value for Whole Foods using the industry average EV/EBITDA for fiscal year 2016? Use the data from Exhibit for a top down EBITDA calculation (Starting from EBIT not Net Income). Assumptions: Depreciation & Amortization in fiscal 2016 of $498 million, net debt at fiscal 2016 year end of $300 million, EV/EBITDA grocery industry average multiple of 7x.
a. $10.7 bln
b. $9.6 bln
c. $13.7 bln
d. $13.4 bln
It CAN'T be none. I keep getting the wrong answer. Please respond as soon as you reasonably can.
Given EV/EBITDA multiple ,average of the industry = 7 times
EBITDA for whole foods = EBIT + Depreciation and Amortization
EBIT = Operating Income = 870 M
D&A= 498 M
EBITDA = 870 + 498 = $ 1,368 M
EV = 7 * EBITDA = 7 * 1368 = $ 9,576 M
So Enterprise Value = $ 9.6 bln
Answer is b) 9.6 B
EV/EBITDA multiples can be used to benchmark or determine the potential acquisition price (where Enterprise Value=...
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