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Lotharan Corp. has yearly sales of $28.4 million and costs of $12.7 million. The company’s balance sheet shows debt of $54.4 million and cash of $38.4 million. There are 1,960,000 shares outstanding and the industry EV/EBITDA multiple is 7.9.What is the company’s enterprise value?

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ayokenny2001

Answer:

The company's Enterprise value is $124.03 million.

Explanation:

Earnings before interest , depreciation, taxes and amortization (EBITDA) = Sales - Cost

= $28.4 million -$12.7 million

= $15.7 million

Since Enterprise Value ÷ EBITDA = 7.9

Therefore,

Enterprise Value = EBITDA × 7.9

= $15.7 million × 7.9

= $124.03 million