You expect mynga, a publicly trading gaming company to generate $450 million in revenues, $30 million...

 

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You expect mynga, a publicly trading gaming company to generate $450 million in revenues, $30 million in after-tax operating income and return on capital (post tax) of 14% next year. Through your research you have come to know the following for a typical gaming company; • is in stable growth phase with a growth rate of 2.1% forever • After tax operating margin (ATOM) is 60% of Mynga • Sales to capital ratio is 2 times of Mynga • Median EV/Sales is 0.6 • all the companies are fairly valued • share the same cost of capital and growth rates with Mynga Estimate the EV/Sales ratio for Mynga You expect mynga, a publicly trading gaming company to generate $450 million in revenues, $30 million in after-tax operating income and return on capital (post tax) of 14% next year. Through your research you have come to know the following for a typical gaming company; • is in stable growth phase with a growth rate of 2.1% forever • After tax operating margin (ATOM) is 60% of Mynga • Sales to capital ratio is 2 times of Mynga • Median EV/Sales is 0.6 • all the companies are fairly valued • share the same cost of capital and growth rates with Mynga Estimate the EV/Sales ratio for Mynga

Answer rating: 100% (QA)

1 Given information Revenues for Mynga next year 450 million Aftertax operating income ATOI for Myng... View the full answer