CSH has EBITDA of $ 5 million. You feel that an appropriate EV/EBITDA ratio for CSH...

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CSH has EBITDA of $ 5 million. You feel that an appropriate EV/EBITDA ratio for CSH...

CSH has EBITDA of

$ 5 million. You feel that an appropriate EV/EBITDA ratio for CSH is 99.

CSH has $ 10 million in debt, $ 2

million in cash, and

800,000 shares outstanding. What is your estimate of CSH's stock price?

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Answer 1

Answer #1

The Enterprise Value can be calculated as :

EV/ EBITDA = 99

EV = $5* 99

= $495

So, EV =Market cpaitalisation + outstanding debt - cash

$495 = Market capitalization + $10 - $2

Market capitalization = $487

Market capitalization = share price * number of shares outstanding

= $487,000,000/ 8,00,000

So, the share price is = $608.75

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Answer 2

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