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CS Professional · Corporate Restructuring, Valuation and Insolvency · Valuation of Business and Assets for Corporate Restructuring

Meera Foods Ltd has an enterprise value of Rs 1,500 lakh by DCF. It has borrowings of Rs 400 lakh, cash and bank balances of Rs 100 lakh, and 10 lakh equity shares. What is the equity value per share?

Equity value per share is Rs 120. Equity value is enterprise value less borrowings plus surplus cash: 1,500 - 400 + 100 = 1,200 lakh, divided by 10 lakh shares. Subtracting cash instead of adding it would wrongly give Rs 100.

  1. ARs 150
  2. BRs 110
  3. CRs 120Correct
  4. DRs 100

Explanation

Equity value = enterprise value - debt + cash = 1,500 - 400 + 100 = Rs 1,200 lakh. Divided by 10 lakh shares = Rs 120. Rs 110 results from deducting debt and also deducting cash instead of adding it.

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