CSH has EBITDA of $4 million. You feel that an appropriate EV/EBITDA ratio for CSH is...
CSH has EBITDA of $4 million. You feel that an appropriate EV/EBITDA ratio for CSH is 7. CSH has $6 million in debt,$4 million in cash, and 775,000 shares outstanding. What is your estimate of CSH's stock price? The estimate of CSH's stock price is? (Round to the nearest cent.)
Homework Answers
EV refers to Enterprise value means Equity value + Debt - Cash i.e. Equtiy + net debt
CSH has EV/EBITDA ratio 7 and EBITDA is $4 million.
So, CSH have Enterprise value 7*$4 = $ 28 million
Enterprise Value = Equity Value + Debt - Cash
$28 million = Equity value + $6 million - $4 million
Equtiy Value = $ 26 million
No. of shares * Stock Price = $26 million
775000 * Stock Price = $26 million
Stock Price = $33.54
So, The estimated stock price is $ 33.54 per share.
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