What is the enterprise value for a company with EBITDA of 50 when the trading multiple is 5x?

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Multiple Choice

What is the enterprise value for a company with EBITDA of 50 when the trading multiple is 5x?

Explanation:
The main idea is that the trading multiple expresses how many times a company’s EBITDA buyers are willing to pay. That multiple is an EV/EBITDA multiple, so enterprise value equals EBITDA multiplied by the multiple. With EBITDA of 50 and a 5x multiple, enterprise value = 50 × 5 = 250. The other numbers would come from using different multiples (for example, a 6x multiple gives 300, a 4x gives 200, a 7x gives 350).

The main idea is that the trading multiple expresses how many times a company’s EBITDA buyers are willing to pay. That multiple is an EV/EBITDA multiple, so enterprise value equals EBITDA multiplied by the multiple. With EBITDA of 50 and a 5x multiple, enterprise value = 50 × 5 = 250. The other numbers would come from using different multiples (for example, a 6x multiple gives 300, a 4x gives 200, a 7x gives 350).

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