Suppose Rocky Brands has earnings per share of $2.17 and EBITDA of $29.9 million. The firm...

Question

Question

Suppose Rocky Brands has earnings per share of $2.17 and EBITDA of $29.9 million. The firm also has 5.8 million shares outsta

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Solution: Enterprise value computation,

Using P/E ratio:

Per share price(P) = P/E ratio * EPS

= $13.5 * $2.17

= $29.295

thus, value of Rocky Brands = P* No. of shares

= $29.295 * 5.8 million

= $169.9 million

Using Enterprise to EBITDA ratio :

Total Enterprise value(including debt) = EBITDA * (EV to EBITDA multiple)

= $29.9 * 7.9

= $236.2

Thus, value of Rocky Brands = $236.2 - $140 million of debt

= $96.2 million

Value computed using EV to EBITDA ratio is more accurate estimate.

Add a comment

Answer 2

Similar Homework Help Questions

Suppose Rocky Brands has earnings per share of $2.46 and EBITDA of $29.9 million. The firm...

Suppose Rocky Brands has earnings per share of $2.46 and EBITDA of $29.9 million. The firm also has 5.25 million shares outstanding and debt of $135 million (net of cash). You believe Deckers Outdoor Corporation is comparable to Rocky Brands in terms of its underlying business, but Deckers has no debt. If Deckers has a P/E of 13.2 and an enterprise value to EBITDA multiple of 7.2, estimate the value of Rocky Brands stock using both multiples. Which estimate is...
Suppose Rocky Brands has earnings per share of $2.31 and EBITDA of $30.4 million. The firm...

Suppose Rocky Brands has earnings per share of $2.31 and EBITDA of $30.4 million. The firm also has 4.8 million shares outstanding and debt of $115 million (net of cash). You believe Deckers Outdoor Corporation is comparable to Rocky Brands in terms of its underlying business, but Deckers has no debt. If Deckers has a P/E of 13.1 and an enterprise value to EBITDA multiple of 7.1, estimate the value of Rocky Brands stock using both multiples. Which estimate is...
Suppose that in January 2006 Kenneth Cole Productions had sales of $522 million, EBITDA of $59.6...

Suppose that in January 2006 Kenneth Cole Productions had sales of $522 million, EBITDA of $59.6 million, excess cash of $99 million, $4.3 million of debt, and 18 million shares outstanding. Use the multipless approach to estimate KCP's value based on the following data from comparable firms: a. Using the average enterprise value to sales multiple in the table above, estimate KCP's share price. b. What range of share prices do you estimate based on the highest and lowest enterprise...

Suppose that in July 2013, Nike Inc. had sales of $25,391 million, EBITDA of $3,261 million,...

Suppose that in July 2013, Nike Inc. had sales of $25,391 million, EBITDA of $3,261 million, excess cash of $3,332 million, $1,395 million of debt, and 899.2 million shares outstanding. Average Maximum Minimum 29.84 + 136% -62% Price Book 2.44 + 70% - 63% Enterprise Value Sales 1.12 + 55% - 48% Enterprise Value EBITDA 9.76 + 86% - 34% a. Using the average enterprise value to sales multiple in the table above, estimate Nike's share price. b. What range...
Suppose that in July 2013, Nike Inc. had sales of $25,339 million, EBITDA of $3,258 million, excess cash of $3,335mil...

Suppose that in July 2013, Nike Inc. had sales of $25,339 million, EBITDA of $3,258 million, excess cash of $3,335million, $1,383 million of debt, and 884.9 million shares outstanding. P/E Price / Book Enterprise Value / Sales Enterprise Value / EBITDA Average 29.84 2.44 1.12 9.76 Maximum +136% +70% +55% +86% Minimum -62% −63% -48% -34% a. Using the average enterprise value to sales multiple in the table above, estimate Nike's share price. b. What range of share prices do...
Please help solve blue boxes. All information is given. Help solve using excel. Problem 10-18 Suppose...

Please help solve blue boxes. All information is given. Help solve using excel. Problem 10-18 Suppose that in July 2013, Nike had sales of $25,313 million, EBITDA of $3,254 million, excess cash of $3,337 million, $1,390 million of debt, and 893.6 million shares outstanding. Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an...

Please show work via excel Table 1 Stock Prices and Multiples for the Footwear Industry, January...

Please show work via excel Table 1 Stock Prices and Multiples for the Footwear Industry, January 2006 Ticker Name Stock Price ($) Market Cap ($ Enterprise Value P/E Price/Book Enterprise Enterprise millions) ($ millions) Value/Sales value/EBITDA NKE Nike 84.2 21,830 20,518 16.64 3.59 1.43 8.75 PMMAY Puma AG 312.05 5,088 4,593 14.99 5.02 2.19 9.02 RBK Reebok 58.72 3,514 3,451 14.91 2.41 0.9 8.58 WWW Wolverine World Wide 22.1 1,257 1,253 17.42 2.71 1.2 9.53 BWS Brown Shoe 43.36 800...
In addition to footwear, Kenneth Cole Productions designs and sources handbags, apparel, and other accessories. You decide, therefore, to consider comparables for KCP outside the footwear industry. You also know the following about KCP: it has sales of $5

In addition to footwear, Kenneth Cole Productions designs and sources handbags, apparel, and other accessories. You decide, therefore, to consider comparables for KCP outside the footwear industry. You also know the following about KCP: it has sales of $518 million, EBITDA of $55.6 million, excess cash of $100 million, $3 million of debt, EPS of $1.65, book value of equity of $12.05 per share, and 21 million shares outstanding.a. Suppose that Fossil, Inc., has an enterprise value to EBITDA multiple of 10.31 and a P/E multiple of 15.81....
Watson Company wants to raise capital for a planned expansion into a new market. The firm has 1 million shares of common equity with a par value (book value) of $1 and retained earnings of $30 million, its shares have a market value of $50 per share. It

You have collected the following information on Watson Company:· Watson has just paid a dividend of $3 and has expected dividend growth of 4.8% per year· Watson has a $20 million debt issue outstanding ($1000 par) with a 6% coupon rate. The debt has semi annual coupons and matures in five years. The bonds are selling at 95% of par· The company has a 40% tax rate· Watson also has 500,000 preferred shares outstanding. They are trading at $65 per...

Young Brands OUNG BRANDS (YB) is a manufacturer of sports clothing and team uniforms. Its industry...

Young Brands OUNG BRANDS (YB) is a manufacturer of sports clothing and team uniforms. Its industry is quite competitive, so the management team has attempted to operate a modern operation with state-of-the-art production facilities. Careful cost management has been an important factor in attaining profits. YB is considered a leader for its fashion sense, pricing, market- ing, and product quality. Professional and university-team uniforms and affiliated products are sold by company salesmen to teams and to retail stores throughout North...

Suppose Rocky Brands has earnings per share of $2.17 and EBITDA of $29.9 million. The firm...

Homework Answers

Add Answer to:
Suppose Rocky Brands has earnings per share of $2.17 and EBITDA of $29.9 million. The firm...

Post as a guest

Earn Coins

Suppose Rocky Brands has earnings per share of $2.46 and EBITDA of $29.9 million. The firm...

Suppose Rocky Brands has earnings per share of $2.31 and EBITDA of $30.4 million. The firm...

Suppose that in January 2006 Kenneth Cole Productions had sales of $522 million, EBITDA of $59.6...

Suppose that in July 2013, Nike Inc. had sales of $25,391 million, EBITDA of $3,261 million,...

Suppose that in July 2013, Nike Inc. had sales of $25,339 million, EBITDA of $3,258 million, excess cash of $3,335mil...

Please help solve blue boxes. All information is given. Help solve using excel. Problem 10-18 Suppose...

Please show work via excel Table 1 Stock Prices and Multiples for the Footwear Industry, January...

In addition to footwear, Kenneth Cole Productions designs and sources handbags, apparel, and other accessories. You decide, therefore, to consider comparables for KCP outside the footwear industry. You also know the following about KCP: it has sales of $5

Watson Company wants to raise capital for a planned expansion into a new market. The firm has 1 million shares of common equity with a par value (book value) of $1 and retained earnings of $30 million, its shares have a market value of $50 per share. It

Young Brands OUNG BRANDS (YB) is a manufacturer of sports clothing and team uniforms. Its industry...

Suppose Rocky Brands has earnings per share of $2.17 and EBITDA of $29.9 million. The firm...

Homework Answers

Add Answer to: Suppose Rocky Brands has earnings per share of $2.17 and EBITDA of $29.9 million. The firm...

Post as a guest

Earn Coins

Add Answer to:
Suppose Rocky Brands has earnings per share of $2.17 and EBITDA of $29.9 million. The firm...