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CMA Final · Strategic Performance Management and Business Valuation · Business Valuation Methods and Approaches

Kaveri Foods Ltd has EBITDA of ₹80 crore. Comparable listed firms trade at an average EV/EBITDA multiple of 9. Kaveri has debt of ₹200 crore and cash of ₹50 crore. Applying the comparable multiple, the equity value is:

Enterprise value is 9 times ₹80 crore, which is ₹720 crore. Equity value equals enterprise value minus debt plus cash, so 720 − 200 + 50 gives ₹570 crore. Cash is added back because it is a non-operating asset outside operating EV.

  1. A₹570 croreCorrect
  2. B₹520 crore
  3. C₹720 crore
  4. D₹470 crore

Explanation

Enterprise value = 80 × 9 = ₹720 crore. Equity value = EV − debt + cash = 720 − 200 + 50 = ₹570 crore. Check: net debt is 150, and 720 − 150 = 570. The option ₹520 crore wrongly subtracts cash instead of adding it.

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