Use the Information for the Question(s)below

question 25

Essay

Use the information for the question(s)below.
During the most recent fiscal year,KD Industries had revenues of $400 million and earnings of $30 million.KD has filed a registration statement with the SEC for its IPO.Before it is offered,KD's investment bankers would like to estimate the value of the company using comparable companies.The investment bankers have assembled the following information based on data for other companies in the same industry that have recently gone public.In each case,the ratios are based upon the IPO price.
-Based upon the price/earnings ratio,what would be a reasonable value for KD?

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Definitions:

Peristalsis

A series of wave-like muscle contractions that move food to different processing stations in the digestive tract.

Ascites

Accumulation of fluid in the peritoneal cavity, causing abdominal swelling, often due to liver disease or cancer.

Eructation

The scientific term for belching or burping, the release of gas from the digestive tract through the mouth.

Mastication

The process of chewing food in preparation for swallowing and digestion.