Question

Winston Watches stock price is $80 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 400 million shares of common stock outstanding. What is Winston's market/book ratio?

Answer 1

market to Book ratio 5.33

Step-by-step explanation:

Market Capitalization

market price x shares outstanding

80 x 400,000,000 = 32,000,000,000 = 32 billions (short scale)

Balance sheet:

Assets - Liab

10 - (1 + 3) = 10 - 4 = 6B

Market to Book Ratio

32 / 6 = 5.33