Question #48
Reading: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples
PDF File: Reading 22 Market-Based Valuation - Price and Enterprise Value Multiples.pdf
Page: 17
Status: Incorrect
Correct Answer: B
Your Answer: C
Question
Earnings before interest, taxes, depreciation, and amortization (EBITD
Answer Choices:
A. debt capacity
B. equity value
C. total company value
Explanation
EBITDA is a pre-tax, pre-interest measure, which represents a flow to both equity and
debt. Thus, it is better suited as an indicator of total company value than just equity value.