Question

If they decide to sell, what should be the price? Exhibit 10 gives statistics of comparable public companies. Use revenue multipliers and sales multipliers. You may also take a look at cash flow valuations in TN-2 and Exhibit 13. The answer here should be an Excel worksheet where you apply financial formulas to value the company. Copy-paste your valuation analysis from the spreadsheet to this document.

A) True
B) False

Answer 1

To determine the selling price of a company, revenue multipliers, sales multipliers, and cash flow valuations can be used. Analysis using financial formulas can also be done to calculate the present value of future profits and determine the price per share.

Step-by-step explanation:

To determine the selling price of a company, revenue multipliers, sales multipliers, and cash flow valuations can be used. By examining comparable public companies in Exhibit 10, these multipliers can be applied to estimate the value of the company. Additional analysis can be done using financial formulas to calculate the present value of future profits and dividing it by the number of shares to determine the price per share. For example, if the PDV of total profits is 51.3 million and there are 200 shares, the price per share would be around $256,500.