Question

In its 2018 fiscal year, the data storage company, NetApp Inc., reported that it had 267.9 million shares of common stock outstanding, trading at a price of about $68 per share. On the firm's balance sheet, the value of common stock equity was reported as $2.067 billion. NetApp's market/book ratio was ________.

(A) 7.7
(B) 68
(C) 8.8
(D) greater than 100

Answer 1

option (C) 8.8

Step-by-step explanation:

Data provided in the question:

Common stock outstanding = 267.9 million shares

Market price = $68 per share

Value of common stock equity reported = $2.067 billion

Now,

Market value = Market price × Number of Common stock outstanding

= $68 × 267.9 million

= $18,217.2 million

= $18,217,200,000

Book value = $2.067 billion = $2,067,000,000

therefore,

NetApp's market/book ratio = $18,217,200,000 ÷ $2,067,000,000

= 8.81 ≈ 8.8

Hence,

Answer is option (C) 8.8