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Enterprise value bridge, EBITDA multiple and a simplified Tobin’s Q proxy

Calculate a simplified enterprise-to-equity bridge and compare total claim value with estimated replacement assets, with explicit units and assumptions.

Separate operating enterprise value from total claim value

Share price is in dollars per share; shares are millions outstanding at the valuation date and other monetary inputs are millions of dollars. Their product is market capitalization. This simplified bridge adds debt and preferred/noncontrolling claims, then subtracts cash. It is not a universal acquisition-price formula: leases, pensions, investments and other adjustments may matter. Keep the consolidation scope consistent with EBITDA and the cash deduction.

Use market values for claims where available and a consistent valuation date. EBITDA is a period measure, not cash flow or a complete measure of operating performance. A peer multiple is an assumption, not evidence of achievable share-price upside.

The Q proxy here divides total claim value before subtracting cash by estimated replacement cost of total assets. This differs from EV divided by replacement assets. A ratio above one does not establish a moat or an investment recommendation. Replacement cost is an estimate; the simplified numerator omits claims not entered here.

Valuation Bridge LineCellTarget Co ($M)Multiple / Per-Share Output
Share price and shares outstandingB2 = $50, B3 = 10MMarket Cap = $500MEquity Value
+ Debt & Pref/NCI - Cash+$180M + $20M - $60MNet Debt + Pref = +$140MEnterprise Value = $640M
EBITDA & Replacement AssetsB7 = $80M, B8 = $500M640 / 80; 700 / 5008.0x EV/EBITDA; Q proxy = 1.40
Implied Price @ 10.0x EBITDATarget EV = $800M(800 + 60 - 180 - 20) / 10$66.00 per share under the 10x assumption

Enterprise Value (EV) & EV/EBITDA valuation multiple

Computes EV = MarketCap + Debt + Pref - Cash and divides by EBITDA B7.

=IF(COUNT(B2:B7)<>6,"Invalid inputs",IF(OR(MIN(B2:B6)<0,B3=0,B7<=0),"Invalid inputs",ROUND((B2*B3+B4+B5-B6)/B7,2)))

Reverse EV-to-Equity bridge: Implied Share Price at Target Multiple (B9)

Add cash and subtract debt and preferred/noncontrolling claims from assumed target EV, then divide by shares outstanding. A negative modeled residual is flagged rather than presented as a negative common-share price. A zero residual remains zero.

=IF(COUNT(B2:B9)<>8,"Invalid inputs",IF(OR(MIN(B2:B6)<0,B3=0,B7<=0,B9<0),"Invalid inputs",IF(B9*B7+B6-B4-B5<0,"No positive equity residual",ROUND((B9*B7+B6-B4-B5)/B3,2))))

Simplified Q proxy, before the cash deduction

Using 500 + 180 + 20 of claim value and 500 of replacement assets gives 1.40. The cash adjustment belongs to the operating EV bridge, not this total-asset proxy.

=IF(COUNT(B2:B8)<>7,"Invalid inputs",IF(OR(MIN(B2:B6)<0,B3=0,B8<=0),"Invalid inputs",ROUND((B2*B3+B4+B5)/B8,2)))

Try the example

Use the original values or change them to test your understanding.

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