Question

# Edelman Engines has \$19 billion in total assets of which cash and equivalents total \$90 million....

Edelman Engines has \$19 billion in total assets of which cash and equivalents total \$90 million. Its balance sheet shows \$2.85 billion in current liabilities of which the notes payable balance totals \$1.02 billion. The firm also has \$8.55 billion in long-term debt and \$7.6 billion in common equity. It has 400 million shares of common stock outstanding, and its stock price is \$25 per share. The firm's EBITDA totals \$1.5 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:  x

EV/EBITDA:

We know that,

Market Value = Stock price * No. of shares

= \$25 * 400 million

= 10,000 million (or) 10 billion

Book value of Common equity = Common equity = \$7.6 billion

Market to book ratio ( M / B ) = Market value / Book value

= \$10 billion / \$7.6 billion

M / B = 1.32

Debt = Long-term debt + Notes payable

= \$8.55 billion + \$1.02 billion

Debt = \$9.57 billion

Enterprise Value = Market value + Debt - Cash

= \$10 billion + \$9.57 billion - \$0.09 billion = \$19.48 billion

EV / EBITDA = \$19.48 billion / \$1.5 billion

EV / EBITDA = 12.98666 (or) 12.99

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