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Johnson Outdoors Inc. sells recreational products. Sales are $425 million and earnings are $19 million. Johnson's share price is $28/share and there are 10 million
Johnson Outdoors Inc. sells recreational products. Sales are $425 million and earnings are $19 million. Johnson's share price | |||||||||||
is $28/share and there are 10 million shares outstanding. Johnson has $8 million of debt outstanding and no excess cash. | |||||||||||
You are trying to estimate the share value of a private firm in the same industry. | |||||||||||
The private firm has $120 million of sales and $7 million of earnings. The private firm has 6 million shares outstanding, | |||||||||||
no debt and no excess cash. | |||||||||||
(i) Estimate the private firms share value using Johnson's sales multiple. | |||||||||||
(ii) Estimate the private firms share value using Johnson's earnings multiple. |
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