Solution-What would be a suitable range of valuations

What would be a suitable range of valuations

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Reference no: EM133161949

Question - Catcher wishes to make a takeover bid for the shares of an unquoted company, Julyfly. The earnings of Julyfly over the past five years have been as follows.

2006	$50,000	2009	$71,000
2007	$72,000	2010	$75,000
2008	$68,000

The average P/E ratio of quoted companies in the industry in which Julyfly operates is 10. Quoted companies which are similar in many respects to Julyfly are: Bumblebee, which has a P/E ratio of 15, but is a company with very good growth prospects.

Wasp, which has had a poor profit record for several years and has a P/E ratio of 7.

What would be a suitable range of valuations for the shares of Julyfly using the Price earnings ratio method?

Reference no: EM133161949

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What would be a suitable range of valuations

Reference no: EM133161949

Reference no: EM133161949

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