Jaxon’s has total revenue of $418,300, earnings before interest and taxes of $102,600, depreciation of $59,200, and a tax rate of 30 percent. the firm is all-equity financed with 15,000 shares outstanding at a book value of $38.03 a share and a price-to-book ratio of 3.2. what is the firm’s ev/ebitda ratio if the firm has excess cash of $49,300?

EV / EBITDA Ratio = 10.98  

Explanation:

given data

total revenue = $418,300

interest and taxes = $102,600

depreciation = $59,200

tax rate = 30 percent

equity financed = 15,000 shares

book value = $38.03

price-to-book ratio = 3.2

excess cash = $49,300

to find out

firm’s EV/EBITDA ratio

solution

we get EBITDA that will be here as

EBITDA = EBIT + Depreciation     .....................1

put here value

EBITDA = $102,600 + $59,200

EBITDA = $161,800

and

Price Book Ratio is = Market Price per share ÷  Book Value per share     ...........2

put here value

3.20 = Market Price per share ÷ $38.03

so Market Price per share = $121.696

and  

now market Value of Equity will be

Market Value of Equity = Market Price per share × No of shares     ..............3

put here value

Market Value of Equity = $121.696 × 15,000

Market Value of Equity = $1,825,440

and  

Enterprise Value = Market Value of Equity - Excess Cash      .................4

put here value we get

Enterprise Value = $1,825,440 - $49,300

Enterprise Value = $1,776,140

so EV / EBITDA Ratio will be here

EV / EBITDA Ratio = Enterprise Value ÷  EBITDA       .......................5

put here value

EV / EBITDA Ratio =

so

EV / EBITDA Ratio = 10.98    

answer; tech (a) is correct;

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

your welcome leave a rate and a < 3