Pellagial Inc. is a nationwide retail chain specializing in women's apparel. The company's most popular lines are Aura and Home. Aura offers executive wear for women in the middle to high-end markets, and Home features casual but stylish clothes, also targeted at women in the middle to high-end markets. The company has 135 million shares outstanding, 30% of which are publicly traded with a current market price of $5.63 per share. The company is expected to net $38 million in the next 12 months. Forecast sales and EBITDA are $633 million and $57 million, respectively. Debt outstanding is $120 million.

a) What is the current enterprise market value of Pellagia?

b) Supposed you are asked to value Pellagia Inc. given the following information. What

is your estimate of equity value? Of enterprise value?

Price-to-EarningsPrice-to-Sales

Abercrombie & Fitch13.041.58

Ann Taylor Stores Corp26.100.78

Bebe Stores Inc15.361.41

Gap IncN/A0.76

Limited Brands Inc18.590.96

Talbots Inc14.111.06