Reference no: EM133033448

Questions -

Q1. Byron Books Inc. recently reported $9 million of net income. Its EBIT was $12.5 million, and its tax rate was 25%. What was its interest expense? (Hint: Write out the headings for an income statement, and then fill in the known values. Then divide $9 million of net income by (1 - T) = 0.75 to find the pretax income. The difference between EBIT and taxable income must be interest expense. Use this same procedure to complete similar problems.) Write out your answer completely. For example, 25 million should be entered as 25,000,000.

Baxley Brothers has a DSO of 16 days, and its annual sales are $3,650,000. What is its accounts receivable balance? Assume that it uses a 365-day year. Round your answer to the nearest dollar.

Q2. Edelman Engines has $5 billion in total assets - of which cash and equivalents total $120 million. Its balance sheet shows $1 billion in current liabilities - of which the notes payable balance totals $1.13 billion. The firm also has $2.75 billion in long-term debt and $1.25 billion in common equity. It has 900 million shares of common stock outstanding, and its stock price is $23 per share. The firm's EBITDA totals $2.691 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.