Edelman Engines has $18 billion in total assets — of which cash and equivalents total $90...

Edelman Engines has $18 billion in total assets — of which cash and equivalents total $90 million. Its balance sheet shows $2.7 billion in current liabilities — of which the notes payable balance totals $0.99 billion. The firm also has $8.1 billion in long-term debt and $7.2 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $31 per share. The firm's EBITDA totals $1.395 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:

Expert Solution

EV/EBITDA = (Market Value of equity + Market Value of debt + Market Value of otherclaims - cash & equivalents)/ EBITDA

= ( 31*0.30 + 2.70 + 8.10 - 0.09 )/ 1.395

= 14.33

Edelman's market/book (M/B) = Market Capitalization/ Book Value

= (31*0.30) / 7.20

= 1.29

jeff jeffy answered 2 years ago

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