The market value of the equity of Thompson, Inc., is $589,000. The balance sheet
ID: 2636727 • Letter: T
Question
The market value of the equity of Thompson, Inc., is $589,000. The balance sheet shows $28,000 in cash and $199,000 in debt, while the income statement has EBIT of $100,000 and a total of $144,000 in depreciation and amortization. What is the enterprise value-EBITDA multiple for this company?
The market value of the equity of Thompson, Inc., is $589,000. The balance sheet shows $28,000 in cash and $199,000 in debt, while the income statement has EBIT of $100,000 and a total of $144,000 in depreciation and amortization. What is the enterprise value-EBITDA multiple for this company?
Explanation / Answer
Value/EBITDA = (Market Value of Equity + Market Value of Debt - Cash) / (Earnings before Interest, Taxes and Depreciation)
= ($589,000 + $199,000 - $28,000) / ($100,000 + $144,000) = 3.11
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