Multiples question
Got this question in an interview the other day
Company has EV/Sales of 2x and EBITDA margin of 10%. What is EV/EBITDA multiple?
Anyone?
Trending Content - Investment Banking Forum
| +438 | Is UBS really that bad? | 81 | 17h |
| +312 | Which Offer to Accept: UBS Analyst Role or Part Time Cashier at the Local Taco Bell | 35 | 4h |
| +138 | Roku-Fox Deal - UBS Misses Out on yet another deals after years chasing this deal | 22 | 3h |
| +116 | Useless associates | 27 | 4h |
| +99 | AI is insane | 30 | 2h |
| +88 | TPH V.S. Mizuho [HOU] | 17 | 2h |
| +87 | Differences in Restructuring Teams? | 25 | 1d |
| +86 | Is Houston SA 28 recruiting already over? | 45 | 2h |
| +86 | Shame on you Evercore - SA 28 | 22 | 13h |
| +82 | FIG Pigeonholes you - is it true? | 25 | 6h |
Career Resources
I would've ended the interview right then and there
Seems like the only thing you can say is EV / EBITDA > 2x
20x
Sales = 10 * EBITDA
EV/Sales = EV/(10*EBITDA)
10* EV/Sales = EV/EBITDA
This is correct. It’s pretty straightforward math really.
10/10 username. Tom Dwan = EBITDA Daddy
Great question:
Step 1: Assume EBITDA is $2 million -> $2 million / 10% EBITDA Margin = $20 million Sales
Step 2: $20 million Sales * 2x EV/Sales multiple = $40 million EV
Step 3: $40 million EV / $2 million EBITDA = 20x EV/EBITDA multiple
Hope this makes sense for future references
You can (and probably should) always plug in numbers in these questions.
Assume $100 EV, which tells you $50 of sales (2x EV / Sales).
$50 of sales at 10% EBITDA margins means $5 of EBITDA.
$100 EV / $5 EBITDA is 20x.
What type of firm was this for? Was it for EB?
You guys think this is difficult?
Fugit asperiores sint delectus facere molestiae. Iusto illo magni aut ducimus nobis voluptas. Nisi consequatur molestiae exercitationem asperiores tempore quod. Voluptas et et eos sunt aperiam inventore.
Atque et ex aliquam possimus. Necessitatibus enim quibusdam modi et. Deserunt est doloribus saepe ad eum quidem et tempora.
Nulla in esse et tempore nisi harum. Soluta aut perspiciatis unde sint aliquam atque et. Nam iste ut dolores eligendi porro. Et dolor quae id. Dicta sapiente placeat ab maiores quia eius. Qui dolor autem unde omnis qui.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...