Question

A company had total revenues of $129 million, operating profit margin of 19%, and depreciation and amortization expense of $15 million over the trailing twelve months. The company currently has $39 million in total debt and $13 million in cash and cash equivalents. If the company's market capitalization (market value of its equity) is $543 million, what is its EV/EBITDA ratio

Answer 1

Answer: 14.4

Step-by-step explanation:

Based on the information that has been provided in the question, the EV/EBITDA ratio will be calculated as:

EV is calculated as:

=Equity + Debt - Cash

=543 + 39 - 13

= 569

EBITDA is calculated as:

= (Revenues ×Operating Profit Margin) + Depreciation

= (129 × 19%) + 15

= 39.51 million

EV/EBITDA

=569/39.51

= 14.4