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What would be the value of cookie monster inc

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Reference no: EM132499746

Question 1: When a corporation makes a distribution to it's shareholders, the distribution is treated according to the "Distribution Ordering Rules". Which is the first step for determining how to treat a distribution?

a. The distribution is a dividend to the extent that the corporation has E&P.

b. The distribution is a capital gain if the company is a corporation.

c. The distribution must be pro rata.

d. The distribution is taxable to all shareholders.

Question 2: In determining the value of a company base on a industry multiple of EBITDA, what would be the value of Cookie Monster, Inc if we assumed that the company had $10 million of EBITDA and we used an industry multiple of 4, and the company had 25 million shares outstanding?

a. $100 million.

b. $25 million.

c. $40 million.

d. $410 million

Question 3: A company borrows money as part of a distribution that it will make to shareholders at the end of the year. Please fill up the sentence: The borrowed money will be:

a. Included in the revenue of the company.

b. Included in the taxable income of the shareholders.

c. Impact the statement of cash flow, but NOT the income statement.

d. Impact the statement of cash flow, and the income statement.

Reference no: EM132499746

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