Enterprise Value Exercises

Enterprise Value Exercises
1. 100% of the equity of Company A sold recently for $1,000,000. The following information was gleaned from its financial statements:
P/L
Revenue 800,000
Earnings Before Interest and Tax 200,000
Net Profit After Tax 100,000
B/S
Cash 150,000
Total Assets 2,000,000
Interest Bearing Debt 750,000
Total Liabilities 1,000,000
a) What is Company A’s Enterprise Value?
1,000,000 + 750,000 – 150,000 = 1,600,000
b) What is Company A’s:
a. Revenue Multiple?1,600,000 / 800,000 = 2.00
b. EBIT Multiple?1,600,000 / 200,000 = 8.00
c. NPAT Multiple?1,600,000 / 100,000 = 16.00
2. 100% of the equity of Company B sold recently for $1,898,500. The following information was gleaned from its financial statements:
P/L
Revenue 1,264,300
Earnings Before Interest and Tax 840,236
Net Profit After Tax 391,488
B/S
Cash 473
Total Assets 2,644,399
Interest Bearing debt 764,522

a) What is Company B’s Enterprise Value?

1,898,500 + 764,522 – 473 = 2,662,549

b) What is Company B’s:

a. Revenue Multiple?2,662,549 / 1,264,300 = 2.1059
b. EBIT Multiple?2,662,549 / 840,236 = 3.1688
c. NPAT Multiple?2,662,549 / 391,488 = 6.8011

3. 90% of the equity of Company C sold recently for $555,000. The following information was gleaned from its financial statements:
P/L
Revenue 650,970
Earnings Before Interest and Tax 184,372
Net Profit After Tax 75,693
B/S
Cash 327,463
Total Assets 1,594,630
Interest Bearing Debt 546,728
Total Liabilities 1,000,008

a) What is Company C’s Enterprise Value?

(555,000/.90) = 616,666.67
616,666.67 + 546,728 – 327,463 = 835,931.67

b) What is Company C’s:

a. Revenue Multiple?835,931.67 / 650,970 = 1.2841
b. EBIT Multiple?835,931.67 / 184,372 = 4.5339
c. NPAT Multiple?835,931.67 / 75,693 = 11.0437
4. 60% of the equity of Company D recently sold for $2,450,000. Company D’s financial statements are shown below. What is Company D’s Enterprise Value? Revenue Multiple? EBIT Multiple?

Equity = 2,450,000/0.60 = 4,083,333.33

EV = 4,083,333.33 + 75,000 – 320,000 = 3,838,333.33

Revenue Multiple = 3,838,333.33 / 2,100,000 = 1.8278
EBIT Multiple = 3,838,333.33 / 830,000 = 4.6245

 
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