Estimate of per share value of company, Finance Basics

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Estimate of per share value of company

Company D has EBITDA of $370 million. It has outstanding debt of $670 million. It is industry has typically displayed a Value /EBITDA ratio of between 5x and 6x EBITDA. If Company D has 20 million shares outstanding, what is the estimate of the per share value of the company?

Computation of the Par value:

5 = Value of the firm / EBITDA

5 = Value of the firm / 370

Value of the firm = 5 x 370

The Value of the firm = 1850

Equity value = Value of the firm - Debt

Equity value = 1850 - 670

Equity value = 1180

The Value of the Equity = 1180/20 = 59 per share

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