Brain Teasers & Mental Math
Mental math / valuation: a company trades at 14x EV/EBITDA with EBITDA of $250m. What is enterprise value, and if net debt is $400m, what is equity value?
Model answer
EV = $3.5bn; equity value = $3.1bn.
EV = 14 × $250M. Compute 14 × 250 = 14 × 25 × 10 = 350 × 10 = $3,500M = $3.5bn. Equity value = EV − net debt = $3,500M − $400M = $3,100M =…
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