Question

Edelman Engines has $13 billion in total assets. Its balance sheet shows $1.95 billion in current liabilities, $9.75 billion in long-term debt, and $1.3 billion in common equity. It has 500 million shares of common stock outstanding, and its stock price is $43 per share. What is Edelman's market/book ratio? Round your answer to two decimal places.

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

B (in billion) $13.00 Total Assets Common equity(Bal. fig.) Long term Debt Current liability Total Liability and Equity $1.30 $9.75 $1.95 $13.00 Share outstanding 0.5 billions Book value per share $2.60 11 12 13 14 15 Market price per share $43.00 Market/Book raio 16.54

Cell reference -

B (in billion) Total Assets 13 -NM O Common equity(Bal. fig.) Long term Debt Current liability Total Liability and Equity =C7-C6-C5 9.75 1.95 =C2 Share outstanding 0.5 billions Book value per share =C4/C9 Market price per share 43 10 11 12 13 14 15 16 17 Market/Book raio =C13/C11

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.