Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko, 2013-2018
Pro Forma Assets & Liabilities for Ideko, 2013-2018

-Assuming that Ideko has a EBITDA multiple of 9.4, then the continuation enterprise value of Ideko in 2018 is closest to:
A)$272.8 million
B)$152.8 million
C)$301.7 million
D)$181.7 million

Question

Use the tables for the question(s)below.
Pro Forma Income Statement for Ideko, 2013-2018
  Pro Forma Assets & Liabilities for Ideko, 2013-2018
 
-Assuming that Ideko has a EBITDA multiple of 9.4, then the continuation enterprise value of Ideko in 2018 is closest to:
A)$272.8 million 
B)$152.8 million 
C)$301.7 million 
D)$181.7 million

Quizplus · Accepted Answer

To calculate the continuation enterprise value of Ideko in 2018, we need to first calculate the EBITDA for 2018, which is given in the Pro Forma Income Statement as $32.6 million.

We can then use the EBITDA multiple of 9.4 to calculate the enterprise value:

Enterprise value = EBITDA x EBITDA multiple

Enterprise value = $32.6 million x 9.4

Enterprise value = $305.64 million

However, we need to adjust for net debt and non-operating assets, which are given in the Pro Forma Assets & Liabilities table for 2018.

Net debt = Total debt - Cash and cash equivalents = $132.4 million - $26.9 million = $105.5 million

Non-operating assets = Short-term investments + Long-term investments + Property, plant, and equipment = $8.6 million + $28.9 million + $94.8 million = $132.3 million

Continuation enterprise value = Enterprise value - Net debt + Non-operating assets

Continuation enterprise value = $305.64 million - $105.5 million + $132.3 million = $332.44 million

Therefore, the closest option is C) $301.7 million.

Use the Tables for the Question(s)below