If a company had an EBITDA of 6% of sales of $100,000,000 and a valuation multiple...
If a company had an EBITDA of 6% of sales of $100,000,000 and a valuation multiple of 5X, what would be the growth in the value of the company if it grew sales to $115,000,000 and EBITDA of 7% with no other changes?
The answer is $10,250,000, but I would like to know how to solve it. Please and Thank you!
Homework Answers
Sales= $ 100,000,000
EBIDTA= 6% of Sales
= 6% * $ 100,000,000
= $ 60,00,000 /-
Value of Company= 5X
=5 * $ 60,00,000
= $ 3,00,00,000 ........ (1)
If Sales = $ 115,000,000
EBIDTA= 7% * $ 115,000,000
= $ 80,50,000
Value of Company will be = 5* $ 80,50,000
=$ 4,02,50,000.......(2)
Growth in the value of Company= (2)-(1)
= $ 4,02,50,000- $ 3,00,00,000
=$ 1,02,50,000
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