Question

Suppose TRU Inc., which is publicly traded, has a price-sales ratio of .12. You’re trying to determine the value of a privately held company Restore Hardware, which is TRU’s closest competitor. RH has provides some information about their most recent financial statements. The company had $112 million in net income, $44 million in depreciation, and $904 million in sales. Given this information, the value (in millions) of Restore Hardware should be ___________ according to the comparables approach.

A- $5.28

B- $55.67

C- $78.51

D- $103.20

E- $108.48

Answer 1

HI

Sales of RH = $904 million

Price/Sales of comparable = 0.12

So using comparable approach Value of RH = 904*0.12 = $108.48 million

Thanks