The EV/EBITDA ratio is calculated to be approximately 12.10. This is obtained by first determining the company's EBITDA, which is $42.825 million, and then calculating the EV as $517.8 million, before dividing the two values.
To calculate the EV/EBITDA ratio, we first need to determine the enterprise value (EV) and earnings before interest, taxes, depreciation, and amortization (EBITDA) of the company. The EV is calculated by adding the company's total debt to its market capitalization and then subtracting cash and cash equivalents. The EBITDA is calculated by adding the operating income to depreciation and amortization expenses.
First, we find the operating income by taking the operating margin and applying it to total revenues. So, 30.5% of $65 million gives us an operating income of $19.825 million. We then add the depreciation and amortization expense of $23 million to the operating income to get the EBITDA: $19.825 million + $23 million = $42.825 million.
The market capitalization of the company is the number of shares outstanding multiplied by the price per share, which is 13 million shares × $30.6 per share = $397.8 million. Then, we calculate the EV: $397.8 million + $233 million - $113 million = $517.8 million.
Finally, the EV/EBITDA ratio is the EV divided by EBITDA: $517.8 million / $42.825 million = approximately 12.10.