We have the following financial information for a company called PINK Frangrances Inc


BALANCE SHEET, 2002 ASSETS Net Fixed Assets Working Capital Cash LIABILITIES Shareholderʹs equity Financial Debt

2000 1200 0 3200

1500 1700 3200

PROFIT AND LOSS ACCOUNT Sales COGS Gross Margin Other costs D&A Interest Earnings before taxes 2002 1800 -1170 630 -310 -170 -65 85 2003E 2000 -1260 740 -350 -185 -80 125

- The capital is divided into 1,500,000 shares (book value of 1€/share) - PINK pays 30% of corporate taxes. You are asked to calculate: a) THE VALUE OF THE COMPANY USING: PER, EV/EBITDA y EV/Sales (For this multiple consider than the average value of comparable companies is 2.0 and 1.9) b) Value of one share according to the different valuations obtained c) If PINK would be a public company and the stock price would be 1.2 euros / share, what would you recomend to do? Buy? Sell? Justify your answer.

L. Alemany

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