Jaxon’s has total revenue of $418,300, earnings before interest and taxes of $102,600, depreciation of $59,200, and a tax rate of 30 percent. the firm is all-equity financed with 15,000 shares outstanding at a book value of $38.03 a share and a price-to-book ratio of 3.2. what is the firm’s ev/ebitda ratio if the firm has excess cash of $49,300?

EV / EBITDA Ratio = 10.98  

Explanation:

given data

total revenue = $418,300

interest and taxes = $102,600

depreciation = $59,200

tax rate = 30 percent

equity financed = 15,000 shares

book value = $38.03

price-to-book ratio = 3.2

excess cash = $49,300

to find out

firm’s EV/EBITDA ratio

solution

we get EBITDA that will be here as

EBITDA = EBIT + Depreciation     .....................1

put here value

EBITDA = $102,600 + $59,200

EBITDA = $161,800

and

Price Book Ratio is = Market Price per share ÷  Book Value per share     ...........2

put here value

3.20 = Market Price per share ÷ $38.03

so Market Price per share = $121.696

and  

now market Value of Equity will be

Market Value of Equity = Market Price per share × No of shares     ..............3

put here value

Market Value of Equity = $121.696 × 15,000

Market Value of Equity = $1,825,440

and  

Enterprise Value = Market Value of Equity - Excess Cash      .................4

put here value we get

Enterprise Value = $1,825,440 - $49,300

Enterprise Value = $1,776,140

so EV / EBITDA Ratio will be here

EV / EBITDA Ratio = Enterprise Value ÷  EBITDA       .......................5

put here value

EV / EBITDA Ratio =

so

EV / EBITDA Ratio = 10.98    

i do believe its modular luck

explanation:

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.