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Use the following to answer questions 26 through 30: Shamrock Inc. has total assets of $16...

Use the following to answer questions 26 through 30:

Shamrock Inc. has total assets of $16 million including cash and marketable securities of $3 million, debt of $2 million, book value of equity of $11 million and market value of equity of $33 million. Last year EBITDA was $4 million and net earnings were $2.2 million.

______29) The EV to EBITDA ratio is closest to:

A. 5 times B. 8 times C. 8.25 times D. 15 times

______30) The price to book ratio is closest to:

A. 2 times B. 3 times C. 5 times D. 8 times

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Answer #1

Given about Shamrock Inc.

Market value of equity = $33 million

Cash and marketable securities = $3 million

Debt = $2 million

EBITDA = $4 million

Book value of equity = $11 million

29). So, EV of the firm = MV of equity + Debt - cash and marketable securities = 33 + 2 - 3 = $32 million

So, EV/EBITDA ratio = 32/4 = 8 times. Option B is correct.

31). Price to book value ratio = Market value of equity/book value of equity

=> P/B ratio = 33/11 = 3 times. Option B is correct.

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