n NISM Certifications
X NISM Series X
Medium

To calculate the EV/EBITDA multiple, the enterprise value is derived by adding the equity value and total debt, then dividing by EBITDA. Given EBITDA Rs 32 crore, debt Rs 84 crore, and equity Rs 200 crore, the EV/EBITDA multiple is 8.87.

Practice question from NISM Series XIX A- Alternative Investments Funds (AIF) Distributors Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    7.50

  2. B

    8.25

  3. 8.87

    Correct answer

  4. D

    9.50

Why this is the answer

Enterprise Value (EV) represents the total value of a company’s operating assets and is calculated by adding equity value and total debt. In this case, EV equals Rs 200 crore plus Rs 84 crore, resulting in Rs 284 crore. The EV/EBITDA multiple is then calculated by dividing Rs 284 crore by EBITDA of Rs 32 crore. This gives a value of 8.87, which indicates how many times EBITDA investors are paying to acquire the company.

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