PRACTICE · LEVEL 1 · ABOUT 8 MIN
Not triedEnterprise value to equity value, both directions
Share price $25, 40M diluted shares. Debt $300M, cash $120M of which $20M is needed to run the business. Preferred stock $50M, noncontrolling interest $30M.
Compute enterprise value. Then a buyer values the whole business at $1500M: what is that per share?
Assumptions
- Only EXCESS cash is subtracted; operating cash stays with the business.
- Book values stand in for market values of debt, preferred and NCI.
- Diluted share count already includes options and convertibles.
Set 1 of 4