Suppose an analyst has gathered the following information on the target company, the TORNADO Company: TORNADO Company
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Question:
TORNADO Company (in millions) | Average of Multiples of | |||
Comparables | ||||
Earnings | $ 16.50 | P/E of comparables | 15.6 | |
Cash flow | $ 21.20 | P/CF of comparables | 20.3 | |
Book value of equity | $ 41.30 | P/BV of comparables | 5.8 | |
Sales | $ 98.10 | P/S of comparables | 4.1 | |
Number of shares outstanding: 750 000 |
Value of the TORNADO’s shares (per share), giving the cash flow multiple and P/S multiple 40% and the other methods 10% each.
Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
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