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:

Resources

An input used to produce economic goods. Land, labor, skills, natural resources, and human-made tools and equipment provide examples. Throughout history, people have struggled to transform available, but limited, resources into things they would like to have—economic goods.

Demand Falls

This occurs when there is a decrease in the desire or willingness of consumers to purchase a good at a given price, leading to potential shifts in the market equilibrium.

Economic Losses

Financial losses experienced by businesses or economies due to factors such as poor investments, natural disasters, or reduced consumer spending.

Pizza Suppliers

Businesses that supply pizza ingredients, equipment, or the pizza itself to consumers or other businesses.