Which of the above multiples analyses do you believe is more appropriate ?
Use the following information concerning Johnson Machine Tool Company. Johnson’s income statement from the fiscal year that ended this past December is:
Revenue ................ $995
Cost of goods sold ............. 652
Gross profit ............... $343
Selling, general, and administrative expenses .. 135
Operating profit (EBIT) .......... $208
Interest expense ................ 48
Earnings before taxes ............ $160
Taxes .................. 64
Net income ............... $ 96
All dollar values are in millions. Depreciation and amortization expenses last year were $42 million, and the company has $533 million of debt outstanding.