You are working at the headquarters of Maia Magnificent, which produces mountaineering and ski equipment. Your CEO has asked you to calculate the enterprise value and equity value per share. What is your answer?
The enterprise value of each business is earnings times the enterprise value to earnings multiple. For mountaineering equipment, 10 * 8 = 80; for ski equipment, 6 * 12 = 72. For Maia Magnificent, we add both businesses together, 80 + 72 = CHF 152 mln.
The equity value is the enterprise value minus net debt. Hence, 152 – 50 = 102. We divide by the number of shares to obtain the equity value per share, 102 / 10 = CHF 10.20.