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A company has generated revenues of $150 million over the last twelve months. Operating profit margin...

A company has generated revenues of $150 million over the last twelve months. Operating profit margin is 35%. Depreciation and amortization expenses are $20 million. Market capitalization (value of equity) is $250 million, total debt is $60 million, and cash is $10 million. What is the company's EV/EBITDA multiple? Round to one decimal place.

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Answer #1

The sales of the company is $150 million.

The operating profit is / sales = 35%

So, the operating profit = 35% * $150

= $52.5

So, the EBITDA = $52.5 + $20

=$72.5 MILLION

The Enterprise Value is = Market capitalisation + debt - cash

= $250 + $60 - $10

= $300

So, EV/EBITDA = $300/ 72.5

= 4.1 ( Rounded off to one decimal place)

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