Use the Table for the Question(s) Below

question 19

Multiple Choice

Use the table for the question(s) below.

-The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $620 million, EBITDA of $81 million, excess cash of $62 million, $11 million of debt, and 120 million shares outstanding. If the firm had an EPS of $0.41, what is the difference between the estimated share price of this firm if the average price-earnings ratio is used and the estimated share price if the average enterprise value/EBITDA ratio is used?

• A) -$0.08
• B) -$0.13
• C) -$1.27
• D) -$1.39

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Definitions:

Extraordinary Item

Events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence, requiring separate disclosure in financial statements for clarity.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, ultimately revealing the net profit or loss.

Internally Generated Patent

A patent developed through a company's own research and development efforts.

Research and Development

Activities undertaken by businesses or organizations to innovate and introduce new products or services, typically involving substantial investment.