Question
Russell's has annual revenue of $387,000 with costs of $216,400. Depreciation is $48,900 and the tax rate is 21 percent. The firm has debt outstanding
Russell's has annual revenue of $387,000 with costs of $216,400. Depreciation is $48,900 and the tax rate is 21 percent. The firm has debt outstanding with a market value of $182,000 along with 9,500 shares of stock that is selling at $67 a share. The firm has $48,000 of cash of which $29,500 is needed to run the business.
A: What is the firm's EV/EBITDA ratio?
B: If comparable firm or median industry EV/EBIDTA is 6.23, is this company undervalued or overvalued? Put it differently, would you buy this company shares or not? Explain in one-two sentences.
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