Cervil had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Cervil has an enterprise value/EBITDA multiple of 5.40. What is the enterprise value of Cervil? (Round to the nearest million dollars.)

Question

Quizplus · Accepted Answer

The enterprise value of Cervil is calculated using the EBITDA and the EV/EBITDA multiple. EBITDA = EBIT + Depreciation and Amortization = $247 million + $84 million = $331 million. Enterprise Value = EBITDA * EV/EBITDA multiple = $331 million * 5.40 = $1,787 million.

Cervil Had an EBIT of $247 Million in the Last