The industry P/E ratio is estimated to be 15.35 in which a target company has sales of $5.5 million, earnings of $2.75 million, and cash flows to equity of $1.12 million.Based on these numbers, what is the valuation of the target company?

Question

Quizplus · Accepted Answer

The valuation of the target company can be calculated using the P/E ratio and the company's earnings. The P/E ratio is given as 15.35, and the company's earnings are $2.75 million. The valuation is calculated as: Valuation = P/E ratio * Earnings = 15.35 * $2.75 million = $42.2125 million.

The Industry P/E Ratio Is Estimated to Be 15