1.Suppose that in January 2006, Kenneth Cole Productions had sales of $518 million, EBITDA of $55.6 million, excess cash of $100 million, $3 million of debt, and 21 million shares outstanding.
a. Using the average enterprise value to sales multiple in Table 9.1, estimate KCP’s share price.
b. What range of share prices do you estimate based on the highest and lowest enterprise value to sales multiples in Table 9.1?
c. Using the average enterprise value to EBITDA multiple in Table 9.1, estimate KCP’s share price.
d. What range of share prices do you estimate based on the highest and lowest enterprise value to EBITDA multiples in Table 9.1?
2.In addition to footwear, Kenneth Cole Productions designs and sells handbags, apparel, and other accessories. You decide, therefore, to consider comparables for KCP outside the footwear industry.
a. Suppose that Fossil, Inc., has an enterprise value to EBITDA multiple of 9.73 and a P/E multiple of 18.4. What share price would you estimate for KCP using each of these multiples,based on the data for KCP in Problems 23 and 24?
b. Suppose that Tommy Hilfiger Corporation has an enterprise value to EBITDA multiple of 7.19 and a P/E multiple of 17.2. What share price would you estimate for KCP using each of these multiples, based on the data for KCP in Problems 23 and 24?
3.Consider the following data for the airline industry in early 2009 (EV = enterprise value, BV = book value, NM = not meaningful because divisor is negative). Discuss the challenges of using multiples to value an airline.
