In this workout, we're given some information about Poisson Inc and Jambon Inc and they operate in the same sector. We're asked to calculate EV to ebitda multiples and ebitda growth for both companies and then comment on their multiples. Now let's have a look at what information we're given about Poisson Inc and Jambon inc now for both companies, we've been given actual numbers for Enterprise Value and ebitda as well as forecast numbers for both of those for years one two, and three. Let's start off by calculating their EV to ebitda multiples.

Now calculating these for the actual numbers is very straightforward. We're going to take the Enterprise Value and I'm going to lock this cell reference so I can reuse it. And then I'm going to divide that by the ebitda and that gives a multiple of 25 times. Now that's a very straightforward calculation for the actual numbers. But what if I want to calculate the forward multiples? Well, I can just copy that formula over to the right hand side. And when we do this, it's important to note that we're still using today's Enterprise Value in the multiple. So for year one, we're using today's Enterprise Value and comparing that to the first year's forecast ebitda. Likewise for years two and three we're still using today's Enterprise Value in the multiple. Now, let's do the same for example ink So now we have the multiples for both companies. We now need to calculate ebitda growth for both companies and we can use the fact that we have the same EV number in all of our multiples to calculate ebitda growth. So let's scroll down for that.

For year one ebitda growth. I can take the multiple from the previous year. Compare that to the multiple per year one.

And that gives me ebitda growth of Poission Inc of 12.5% Let's do the same calculation for Jambon Inc.

And that gives me ebitda growth for Jambo inc of 7.2% Now, let's copy those formulas over to the right. And have a look at the trend in ebitda growth for both companies. If we look at their ebitda growth, we can see that that's falling throughout the forecasts and that should be no surprise because if you look at the multiples those multiples are falling as we look across the forecasts. But also we can see that the ebitda growth rates for these companies are converging and that by year three they have fully converged. Now that trend is also reflected in their multiples. We can see that they're multiple start off quite far apart. We have Poission inc on 25 times and Jambon inc on 23.2 times and by the third forecast year. Those multiples have almost completely converge.