Question

Edelman Engines has $19 billion in total assets — of which cash and equivalents total $110...

Edelman Engines has $19 billion in total assets — of which cash and equivalents total $110 million. Its balance sheet shows $3.8 billion in current liabilities — of which the notes payable balance totals $1.14 billion. The firm also has $9.5 billion in long-term debt and $5.7 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $21 per share. The firm's EBITDA totals $0.756 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places.

M/B:  ×

EV/EBITDA:

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Answer #1

Book Value of Equity =  $5.7 billion

Market price per share =  $21 per share

Number of shares outstanding = 300 million

Market Value of equity = MP/ share * No of shares o/s = 21 * 300 = $ 6.3 Billion

Market to Book ratio = 6.3 B/ 5.7 B = 1.052 times

EV/ EBITDA = Enterprise value / EBITDA

Enterprise value = MV of Equity + MV of Debt - Cash & Equivalents = 6.3 B + (9.5 + 1.14) - 110 M = $ 16.83 B

EV/ EBITDA = 16.83 / 0.756 = 22.26 times

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