Suppose Rocky Brands has earnings per share of $2.25 and EBITDA of $31.3 million. The firm also has 5.5 million shares outstanding and debt of $ million (net of cash). You believe Jared's Outdoor Corporation is comparable to Rocky Brands in terms of its underlying business, but Jared's has no debt. If Jared's has a P/E of and an enterprise value to EBITDA multiple of , estimate the value of Rocky Brands stock using both multiples. Which estimate is likely to be more accurate?

Enterprise Value to EBITDA Ratio or P/E Ratio

P/E Ratio is Share Price/Earning Per Share

EBITDA = Net sales raw material costs employee costs other operating expenses.

Rocky Brands' stock value by using the P/E ratio is $ per share. (Round to two decimal places.) The value of Rocky Brands by using the P/E ratio is $ million. (Round to one decimal place.) The value of Rocky Brands by using the EBITDA ratio is S million. (Round to one decimal place.) Rocky Brands' stock value by using the EBITDA ratio is $ per share (Round to two decimal places.) Which estimate is likely to be more accurate? (Select from the drop-down menu.) Hint: The more accurate valuation method would take debt into consideration is the more accurate valuation method. Rocky Brands' stock value by using the P/E ratio is $ per share. (Round to two decimal places.) The value of Rocky Brands by using the P/E ratio is $ million. (Round to one decimal place.) The value of Rocky Brands by using the EBITDA ratio is S million. (Round to one decimal place.) Rocky Brands' stock value by using the EBITDA ratio is $ per share (Round to two decimal places.) Which estimate is likely to be more accurate? (Select from the drop-down menu.) Hint: The more accurate valuation method would take debt into consideration is the more accurate valuation method