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    Calculated EPS

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    Given Best Travel organizes virtual travel tours, is planning an IPO. Its current investors hold 300,000 shares, which at IPO will be converted into common shares at 1:1 ratio.
    The company competes with the following publicly traded companies: CoachTraveler, VirtualExplorer, Home World, and Stay-at-Home.
    Financial Information CoachTraveler VirtualExplorer Home World Stay-at-Home Using the Method of multiples based on both P/E ratio and the enterprise value to EBITDA ratio, at what price should the stock be offered?
    Shares Outstanding 150,000 600,000 500,000 1,000,000 With the data given, which of the four comparable firms is/are the best comparison firm(s) for this company?
    Stock Price $12.00 $24.00 $34.00 $35.00 Why? Justify your answer through the following appropriate calculations.
    Market Capitalization $1,800,000 $14,400,000 $17,000,000 $35,000,000
    Short Term Debt $15,000 $- $200,000 $-
    Long Term Debt $- $2,750,000 $1,245,000 $-
    Cash & Equivalents $400,000 $700,000 $1,500,000 $4,000,000
    Short Term Investments $90,000 $600,000 $250,000 $5,000,000
    EBITDA $218,100 $395,300 $450,000 $1,540,000
    Net Income $(40,500) $237,900 $291,800 $894,500
    Calculated EPS

    Price to Earnings
    Enterprise Value
    EBITDA multiple

    Best Travel (Given)
    EBITDA $400,000
    Cash $600,000
    Long Term Debt $1,000,000
    Net income $265,000
    Shares 300,000
    EPS $0.88

    CoachTraveler VirtualExplorer Home World Stay-at-Home Average
    Imputed IPO price per share from PE ratio
    Impute EV from EBITDA multiples
    Owner's equity
    Impute IPO price per share


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    Solution Summary

    The expert calculates EPS is achieved.