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Question 1 . 4 : Equity versus Enterprise Value ( 5 p . ) Please find information below on components of enterprise value and profitability
Question : Equity versus Enterprise Value p
Please find information below on components of enterprise value and profitability for German consumer
goods companies Beiersdorf and Henkel. Use this information to answer the questions below.
Ap In applying valuation multiples, analysts and investors can choose between equity and enterprise
value multiples. Why do analysts and investors prefer enterprise value multiples to compare relative valuation
between companies?
Bp In deriving the enterprise value for both Beiersdorf and Henkel, the total cash is deducted from both
company's debt position. What does this suggest about the nature of the cash in these businesses?
Cp In your view, Beiersdorf is overvalued and should be trading on an EVBITDA multiple of x What
is your estimate of the value per share based on this EVEBITDA multiple?
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