Suppose you are evaluating the values of two companies on the basis of EV/EBITDA multiple.

Company 1:

Leela Ltd. has an equity value of 1,00,000; debt on their balance sheet is 50,000 and their cash and cash equivalents are 10,000. Their EBITDA for the year is 10,000.

Company 2:

Ramson Ltd. has an equity value of 2,00,000; their cash and cash equivalents are 20,000 and the debt on their balance sheet is 70,000. Their EBITDA for the year is 70,000.

What are the EV/EBITDA of Leela Ltd. and Ramson Ltd.?

Options:

EV/EBITDA of Leela Ltd. and Ramson Ltd. are 14 and 3.571, respectively.

EV/EBITDA of Leela Ltd. and Ramson Ltd. are 6 and 23.5, respectively.

EV/EBITDA of Leela Ltd. and Ramson Ltd. are 14 and 2.342, respectively.

EV/EBITDA of Leela Ltd. and Ramson Ltd. are 6 and 3.571, respectively.