With EBITDA of 50 and a 5x trading multiple, what is the enterprise value?

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Multiple Choice

With EBITDA of 50 and a 5x trading multiple, what is the enterprise value?

Explanation:
The main idea is that enterprise value using an EV/EBITDA multiple is found by multiplying EBITDA by that multiple. With EBITDA of 50 and a 5x multiple, enterprise value = 50 × 5 = 250. This figure represents the value of the whole firm, before adjusting for net debt to get equity value if needed. Other numbers would require a different EBITDA or a different multiple (for example, 300 would need 60 EBITDA at 5x, or 50 EBITDA at 6x), so 250 is the correct outcome.

The main idea is that enterprise value using an EV/EBITDA multiple is found by multiplying EBITDA by that multiple. With EBITDA of 50 and a 5x multiple, enterprise value = 50 × 5 = 250. This figure represents the value of the whole firm, before adjusting for net debt to get equity value if needed. Other numbers would require a different EBITDA or a different multiple (for example, 300 would need 60 EBITDA at 5x, or 50 EBITDA at 6x), so 250 is the correct outcome.

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