Forum Archive Index - February 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

>>...
>>"Computing a company's enterprise value is easy.
>>
>>Take the stock's market capitalization (which is the stock price
>>multiplied by the number of shares outstanding),add long-term debt, 
>>and then subtract the value of assets peripheral to the core 
>>businesses (that is, cash). To compute a per-share number, divide 
>>the enterprise value by the number of outstanding common shares" 
>> 
> eg.
> 
>Ebos
>current share price = $3.20
>Issue shares 26,821,628
>Market Capitlisation $85.83 Million
> 
>After Tax profit  $4,238, 000
>Therefore PE ratio = 20.3
> 
>Shareholders equity = 35,476,000
>Cash =$68,674
>Non current liabilities = 3,117,000
> 
>Therefore Enterprise value = $88,878,000
>
I'll take the figures as correct up to here.

P(ev)/E
=88,878,000/4,238,000
=21.0

which is not too different to the P/E figure of 20.3 you calculated 
further up the page.  This isn't surprising since Ebos has low debt 
and not too much spare cash floating around in the cash account.
> 
> EV per share= $ 3.31
>
> price per EV =  1.0
> 
> Humm
> what sayest thou
> 
If you believe that market price should reflect the enterprise value 
of the share, then the market has got it right? SNOOPY


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