Answer a:
We calculate below average enterprise value to EBIDTA multiple:
Given:
KCP's EBITDA = $55.6 million
Debt = $3 million
Excess Cash = $100 million
Shares outstanding = 21 million
KCP's Enterprise value (EV) = KCP's EBITDA * Average enterprise value to EBIDTA multiple = 55.6 * 8.48583 = $471.81 million
KCP's Market capitalization = EV - Debt + Excess cash = 471.81 - 3 + 100 = $568.81 million
Price per share = Market capitalization /Shares outstanding = 568.81 / 21 = $27.09
Answer b:
Highest Average enterprise value to EBIDTA multiple = 10.75
Lowest Average enterprise value to EBIDTA multiple = 6.6
Highest share value = (55.6 *10.75 - 3 +100) / 21 = $33.08
Lowest share value = (55.6 * 6.66 - 3 +100) / 21 = $22.25
Answer c:
As calculated above (in answer a):
Average enterprise value to sales multiple = 1.06583
KCP's sales =518 million
Price per share = (518 *1.06583 - 3 + 100) / 21 = $30.91
Answer d:
Highest enterprise value to sales multiple = 2.19
Lowest enterprise value to sales multiple = 0.47
Highest share value = (518 * 2.19 - 3 +100) / 21 = $58.64
Lowest share value = (518 * 0.47- 3 +100) / 21 = $16.21
Table 1 Stock Prices and Multiples for the Footwear Industry,January 2006 Ticker Name Stock Price...
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