If a company has LTM EBITDA of $100 million and is purchased at a 9x EBITDA multiple, what is the enterprise value?

If a company has LTM EBITDA of $100 million and is purchased at a 9x EBITDA multiple, what is the enterprise value?

• A. $500 million
• B. $700 million
• C. $900 million
• D. $1.2 billion

Answer: (C)

To determine the enterprise value when a company is purchased based on its Last Twelve Months (LTM) Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and an associated purchase multiple, you need to multiply the LTM EBITDA by the EBITDA multiple. In this case, the company has an LTM EBITDA of $100 million and is being purchased at a 9x EBITDA multiple. To find the enterprise value, you would calculate it as follows: Enterprise Value = LTM EBITDA × EBITDA Multiple Enterprise Value = $100 million × 9 Enterprise Value = $900 million This calculation shows that the enterprise value of the company, based on the given EBITDA and multiple, is indeed $900 million. Understanding the relationship between LTM EBITDA and the multiples applied in valuation is crucial in financial analysis, as it allows investors and analysts to quickly gauge the value of a business based on its operating performance.

To determine the enterprise value when a company is purchased based on its Last Twelve Months (LTM) Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and an associated purchase multiple, you need to multiply the LTM EBITDA by the EBITDA multiple.

In this case, the company has an LTM EBITDA of $100 million and is being purchased at a 9x EBITDA multiple. To find the enterprise value, you would calculate it as follows:

Enterprise Value = LTM EBITDA × EBITDA Multiple

Enterprise Value = $100 million × 9

Enterprise Value = $900 million

This calculation shows that the enterprise value of the company, based on the given EBITDA and multiple, is indeed $900 million.

Understanding the relationship between LTM EBITDA and the multiples applied in valuation is crucial in financial analysis, as it allows investors and analysts to quickly gauge the value of a business based on its operating performance.