You have been asked to estimate the enterprise value of Dan Automotive as of today in...

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You have been asked to estimate the enterprise value of DanAutomotive as of today in an effort to determine what price thefirm might sell for if it were offered for sale on the open market.You have identified a public company, Kal Motors, which hasbusiness operations that are identical to those at Dan Auto. Theincome statements for Dan Auto and Kal Motors for their fiscalyears that ended this December 31, 2017 are as follows:
Financials ($ inMillions)                                   Dan Auto           KalMotors
Revenue                                                                  $995                       $882
Cost of goodssold                                                   652                         584
Grossprofit                                                           $343                      $298
Selling, general, & administrativeexpenses            135                      105
EBIT                                                                      $208                      $193
Interestexpense                                                         48                         32
Pretaxincome                                                         $160                      $161
Taxes                                                                          64                          48
Netincome                                                              $ 96                     $113
Dan Auto had depreciation and amortization expenses of $42M lastyear and $833M of debt outstanding as of the end of the year. KalMotors had depreciation and amortization expenses of $35M last yearand $600M of net debt outstanding as of the end of the year. Itsstock is currently trading at $12.25 per share with 150M in sharesoutstanding.
Using the EV/EBITDA multiple of Kal Motors, what is theenterprise value of Dan Auto? What is the value of 100 percent ofits equity?
What are the advantages of using an EV/EBITDA multipleinstead of a P/E multiple in a multiples analysis such asthis?

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Answer 1 Kal Motors Market value of Equity Number of shares outstanding Current price 150 1225 183750 Million Enterprise value of Kal Motors Market value of Equity Debt outstanding 183750 600 243750 million EBITDA of Kal Motors EBIT depreciation and See Answer

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You have been asked to estimate the enterprise value of DanAutomotive as of today in an effort to determine what price thefirm might sell for if it were offered for sale on the open market.You have identified a public company, Kal Motors, which hasbusiness operations that are identical to those at Dan Auto. Theincome statements for Dan Auto and Kal Motors for their fiscalyears that ended this December 31, 2017 are as follows:Financials ($ inMillions) Dan Auto KalMotorsRevenue $995 $882Cost of goodssold 652 584Grossprofit $343 $298Selling, general, & administrativeexpenses 135 105EBIT $208 $193Interestexpense 48 32Pretaxincome $160 $161Taxes 64 48Netincome $ 96 $113Dan Auto had depreciation and amortization expenses of $42M lastyear and $833M of debt outstanding as of the end of the year. KalMotors had depreciation and amortization expenses of $35M last yearand $600M of net debt outstanding as of the end of the year. Itsstock is currently trading at $12.25 per share with 150M in sharesoutstanding.Using the EV/EBITDA multiple of Kal Motors, what is theenterprise value of Dan Auto? What is the value of 100 percent ofits equity?What are the advantages of using an EV/EBITDA multipleinstead of a P/E multiple in a multiples analysis such asthis?