Ketema,Inc The Median and Mean Values for Ketema's Peers Are Presented

Ketema,Inc.is a manufacturer of electronic instruments.Use the following information on Ketema and five other similar companies to value Ketema,Inc.on December 31,2013. $$\begin{array} { l r } \hline{ \quad\quad\quad\quad\quad\quad\text { Ketema, Inc., } 2013 \text { (\$ millions) } } \\\hline \text { Net income } & \$ 66.10 \\\text { Number of common share (millions) } & 32.82 \\\text { Earnings before interest and tax } & \$ 112.30 \\\text { Tax rate } & 22 \% \\\text { Book value of equity } & \$ 335.10 \\\text { Book value of interest-bearing debt } & \$ 470.80 \\\hline\end{array}$$

The median and mean values for Ketema's peers are presented below:
The following estimates require subjective reasoning.In coming to these estimates,Ketema,Inc.is judged as exhibiting representative earnings per share growth,but considerably higher financial leverage,and a below-average five-year growth rate in sales.The company's higher-than-average leverage suggests that its firm value ratios will be particularly key,as equity value ratios can be distorted by Ketema's higher leverage.Since the firm value ratios abstract from differences in financing,values for these ratios are selected that are closer to the sample averages.Turning to equity value ratios,Ketema's modest growth and higher financial leverage suggest a 10 to 20 percent discount from the group average for its price/earnings and price/sales indicators.