Multiplier method of valuation

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A. Your company has sales of $4.5 million per year. Comparable company data indicates a sales multiple of 6X is average for companies like yours. Using the multiples method (EV/Sales), how much is your company worth?

6X net income

$27 million

$4.5 million

$6 million

B. Which of the following is a step in using the multiplier method of valuation?

Using derivatives

Selecting an appropriate multiplier

Forecasting net income

Calculating future cash flows

C. Your company has $7.5 million per year in net sales. Comparable companies have been sold recently for multiples of 5X sales. Using the multiples method (EV/Sales), how much is your company worth right now?

Cannot calculate

$7.5 million

$37.5 million

$5 million

Reference no: EM132413509

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