Question
1-You will use the price multiples approach to estimate the value of company X. You gather the following information about 4 comparable companies Valuation Variables
1-You will use the price multiples approach to estimate the value of company X. You gather the following information about 4 comparable companies
Valuation Variables | A | B | C | D |
Market Price | $44.12 | $24.36 | $31.25 | $35.33 |
EPS | 2.36 | 1.85 | 1.97 | 2.07 |
Book Value/share | 3.25 | 4.58 | 3.98 | 2.89 |
CF/share | 11.69 | 8.95 | 7.58 | 12.84 |
Sales/share | 6.58 | 4.36 | 4.85 | 3.85 |
Company X has the following information: Company X | |
EPS | 2.58 |
Book Value/share | 4.36 |
CF/share | 5.84 |
Sales/share | 7.25 |
You also have the following information related to recent acquisition of similar companies
acquisition | Price prior to sale | Sale Price |
1 | 35.36 | 41.25 |
2 | 19.85 | 26.5 |
3 | 24.85 | 30.5 |
4 | 33.64 | 39.75 |
1-Calculate the average values of the price multiples, P/E, P/B, P/CF and P/S based on the 4 comparables.
2-What are the 4 price estimates of company X using each of the P/E, P/B, P/CF and P/S multiples.
3-What is the average price of company X?
4-What is the price of company X under the following weighting method: 35% P/E, 30% P/B, 15% P/CF, 20% P/S.
5-What is the average premium paid for the recent acquisitions?
6-What is the range of asking prices of this company if youre going to use only the two averages calculated in questions 3 and 4 and the premium in question 5?
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