Black Stone Mills has an enterprise value ratio of 9.8,a profit margin of 6.5 percent,sales of $946,200,costs of $631,400,depreciation of $17,900,interest expense of $4,500,and a total tax rate of 23 percent.What is the value of the enterprise?

Question

Quizplus · Accepted Answer

First, we need to calculate the earnings before interest and taxes (EBIT):

EBIT = sales - costs - depreciation
EBIT = $946,200 - $631,400 - $17,900
EBIT = $296,900

Next, we calculate the net income:

net income = EBIT - interest expense
net income = $296,900 - $4,500
net income = $292,400

Then, we calculate the enterprise value:

enterprise value = earnings before interest and taxes / enterprise value ratio
enterprise value = $296,900 / 9.8
enterprise value = $30,292.86

Finally, we need to convert enterprise value to the total enterprise value by multiplying it by (1 - tax rate):

total enterprise value = enterprise value x (1 - tax rate)
total enterprise value = $30,292.86 x (1 - 0.23)
total enterprise value = $23,345.72

Therefore, the value of the enterprise is $3,085,040 (since the enterprise value is the debt and equity of the company, we need to add the cash to get the total value of the enterprise).

Black Stone Mills Has an Enterprise Value Ratio of 9