Question

Through a comparable company analysis for Alibaba, you determined a P/E ratio of 6.0x is appropriate to value the company. Based on this metric, what is the implied Enterprise Value of Alibaba? Review Later $740,366 $1,391,693 $1,055,792 $898,073

Answer 1

$740,366

Step-by-step explanation:

The computation of the enterprise value is given below:

P/E ratio = Market Capitalization ÷ Earnings

6 = Market Capitalization ÷ $149,680

Market Capitalization is

= 6 × $149,680

= $898,080

Now,

Enterprise Value = Market Capitalization + Market Value of Debt - Cash & Cash Equivalents.

= $898,080 - $157,714

= $740,366