Question

Suppose that in January​ 2006, Kenneth Cole Productions had sales of $ 540 ​million, EBITDA of $ 53.2 ​million, excess cash of $ 91 ​million, $ 5.4 million of​ debt, and 18 million shares outstanding. Use the multiples approach to estimate​ KCP's value based on the following data from comparable​ firms: Using the average enterprise value to sales multiple in the table​ above, estimate​ KCP's share.

Answer 1

To estimate Kenneth Cole Productions' share price using the multiples approach, you would typically multiply its sales by the average EV/sales multiple from comparable firms, adjust for cash and debt, and divide by the number of shares outstanding. Unfortunately, without the average multiple, it's not possible to complete this calculation.

Step-by-step explanation:

To estimate the value of Kenneth Cole Productions (KCP) based on similar firms' multiples, we would need the average enterprise value to sales multiple from the comparable firms. However, this value is not provided in the question. Typically, you would multiply Kenneth Cole Productions' sales by the average enterprise value to sales ratio to estimate the enterprise value (EV).

Subtracting excess cash and adding debt to the EV would give us the equity value. Finally, dividing by the number of shares outstanding would provide an estimate for KCP's share price.However, with the available information, we can't complete this calculation.

Moreover, it's important to note that the fictive present value (PDV) calculation of 51.3 million/200 resulting in a share price of approximately $256,500 seems to be unrelated to the question at hand, as it talks about PDV of profits and a different number of shares. The real value calculation needs accurate multiples and corresponding financial figures from the provided data of comparable firms, which are not included in the question.