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You are trying to assess the value of the business for the ABC Corporation. You have gathered the following income statement data: Sales of $35,000,000
You are trying to assess the value of the business for the ABC Corporation. You have gathered the following income statement data: Sales of $35,000,000 and cost of sales of $15,000,000 and SG\&A Expenses of $6,000,000. Additionally, from the balance sheet, you find that long term debt is $2,500,000 and preferred stock is $800,000 and cash is $3,100,000. The market capitalization of ABC is $18,900,000. You only will invest in firms with anEV/EBITDA greater than 1.25. What is the Enterprise Value/EBITDA ratio and is it acceptable? EV/EBITDA =.90; not acceptable EV/EBITDA = 1.36; acceptable (C) EV/EBITDA = 1.25; acceptable (D) EV/EBITDA =1.63; acceptable
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