The Pitts Corporation (financial statements provided in Example 6) had EBIT of \($500\) million and EBITDA of \($800\) million in 2012. Show the adjustments that would be required to find FCFF and FCFE:

i. Starting from EBIT.

ii. Starting from EBITDA. 

Data From Example 6:-

While researching Smithson Genomics, Inc., a (fictitious) healthcare information services company, you encounter a difference of opinions. One analyst’s report claims that Smithson is at least 15 percent overvalued, based on a comparison of its P/E with the median P/E of peer companies in the healthcare information services industry and taking account of company and peer group fundamentals. A second analyst asserts that Smithson is undervalued by 10 percent, based on a comparison of Smithson’s P/E with the median P/E of the Russell 3000 Index, a broad-based US equity index. Both analyses appear to be carefully executed and reported. Can both analysts be right?