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EBITDA Multiple: Understanding Earnings Before Interest, Taxes, Depreciation and Amortization

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EBITDA Multiple: Understanding Earnings Before Interest, Taxes, Depreciation and Amortization

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Questions and Answers

What is the value of the equity after incorporating the risk management cost?

Php29.75

Php30.5

Php31.75

Php28.0 (correct)

What is the objective of comparable company analysis?

To identify the strengths and weaknesses of a company

To determine the market value of a company

To compare the financial performance of similar companies

To determine the value of a company based on similar businesses in the industry (correct)

What is the disadvantage of using heuristic pricing rules method?

Pricing multiples may not be backed by rigorous statistical analysis (correct)

It is based on expert opinion

It is only used for small businesses

It is not reliable

What is the range of the price of Jopet Hotels and Leisure based on comparable company analysis?

Php29.75 to Php33.00 Signup and view all the answers

What is the decrease in the value of the firm after incorporating the risk management cost?

Php1.75 Signup and view all the answers

What is the purpose of using tools in comparable company analysis?

To enable comparison between companies despite differences in strategy, structure, and size Signup and view all the answers

What does EBITDA represent?

The net amount of revenue after deducting operating expenses and before deducting financial fixed costs, taxes and non-cash expenses Signup and view all the answers

How can EBITDA be computed indirectly?

By adding net income, depreciation and amortization and incorporating working capital adjustments Signup and view all the answers

What is the EBITDA Multiple calculated by dividing?

Market Value per Share by EBITDA per share Signup and view all the answers

What does an EBITDA Multiple of 2 indicate?

The value of the firm to the market is 2x for every peso of EBITDA earned Signup and view all the answers

Why do some companies adjust EBITDA to incorporate costs relative to other quantified risks?

To generate a more conservative EBITDA result Signup and view all the answers

What does the average EBITDA multiple of 3.5 for the hospitality industry indicate?

The industry is fairly valued Signup and view all the answers