Question
Calculate the enterprise value of your company. Use that value and compare it with your current market price. (EV = Market cap + Total debt
Calculate the enterprise value of your company. Use that value and compare it with your current market price.(EV = Market cap + Total debt - Cash)
oCompare EV/EBITDA and P/E ratio. Write a short summary comparing these 2 rations
oWhich metric do you prefer (P/E vs. EV/EBITDA). Explain your answer.
oArticles that might help you in the analysis:
Enterprise value: https://www.investopedia.com/terms/e/enterprisevalue.asp
EV/EBITDA vs. P/E: https://www.investopedia.com/ask/answers/061515/which-metric-should-i-pay-more-attention-evebitda-or-pe.asp
You'll find your company beta online. The beta you see is levered beta. Un lever the beta and tell me how your company capital structure (leverage) has impacted the risk of the company.
Calculate your expected return (cost of equity) and compare it with the actual return (FCFE/Total Equity). Is the company fulfilling the expectation of shareholders?
Will you invest in this company or not? Explain your answers
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