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Preston Woods has 17,500 shares of stock outstanding along with$408,000 of interest-bearing debt. The market and book values ofthe debt are the same. The firm has sales of $697,000 and a profitmargin of 6.8 percent. The tax rate is 21 percent, the debt-equityratio is 40 percent, and the price-earnings ratio is 11.8. The firmhas $130,000 of current assets of which $41,200 is cash. Theinventory turnover ratio is 6.757. Current assets consist only ofcash and inventory. Calculate the company’s enterprise valuemultiple (EBITDA ratio).
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