Question
a Company A has a revenue of Rs. 500,000. Its operating profit is Rs. 200,000. EBITDA has been recorded at Rs.250,000. Its Market Capitalization is
a Company A has a revenue of Rs. 500,000. Its operating profit is Rs. 200,000. EBITDA has been recorded at Rs.250,000. Its Market Capitalization is Rs.5,000,000. No. of shares is 5 lakhs. The company has registered a Net Income of Rs. 150,000. The company does not have debt. Cash is Rs. 500,000. FCFF is negative Rs. 1,00,000 for the next five years. The industry EV/EBITDA is 5x Price to Sales ratio is 2x and P/E ratio is 4x. WACC is 8%. Which method of valuation would suite the company? What are the strengths and shortcoming o the method you have used?
b Company A has a revenue of Rs. 500,000. Its operating loss is Rs. 200,000. EBITDA has been recorded at negative Rs.170,000. Its Market Capitalization is Rs.5,000,000. No. of shares is 5 lakhs. The company has registered a Net Loss of Rs. 150,000. The company does not have debt. Cash is Rs. 500,000. Future FCFF is negative Rs. 1,00,000 for the next five years. The industry EV/EBITDA is 5x Price to Sales ratio is 2x and P/E ratio is 4x. WACC is 8%. Which method of valuation would suite the company? What are the strengths and shortcoming o the method you have used?
Please share answer in detail along with valuation methods and calculations of valuations as soon as possible
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