$4-4.$ MARKET$/$BOOK AND EV$/$EBITDA RATIOS Edelman Engines has $$17$ billion in total assets$-$of

which cash and equivalents total $$100$ million. Its balance sheet shows $$1\mathrm{.}7$ billion in current

liabilities$-$of which the notes payable balance totals $$1$ billion. The firm also has $$10\mathrm{.}2$ billion in

long$-$term debt and $$5\mathrm{.}1$ billion in common equity. It has $300$ million shares of common stock

outstanding, and its stock price is $$20$ per share. The firm's EBITDA totals $$1\mathrm{.}368$ 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?

Answer

$\frac{M}{B}=1\mathrm{.}1765$;$E\frac{V}{E}$BITDA$=12\mathrm{.}5$