Question

​(Market value​ analysis) Lei​ Materials' balance sheet lists total assets of $ 1.37 ​billion, $ 186 million in current​ liabilities, $ 414 million in​ long-term debt, $ 770 million in common​ equity, and 57 million shares of common stock. If​ Lei's current stock price is $ 46.55​, what is the​ firm's market-to-book​ ratio?

Answer 1

Market-to-book​ ratio=3.44591 times

Step-by-step explanation:

Give data:

Total assets=$1.37 billion

Current liabilities=$186 m

Long term debt=$414 m

Common Equity=$770 m

Number of share of common stock= 57 m

Current stock price=$46.55

Required:

the​ firm's market-to-book​ ratio=?

Solution:

We will calculate the book value of each share:

Book value per share=
`(common\​ equity)/(Number\ of\ common\ shares)`

Book value per share=
`(\$770 m)/(57 m)`

Book value per share=$13.50877

Market-to-book​ ratio=
`(Market\ value)/(Book\ value)`

Market-to-book​ ratio=
`(\$46.55)/(\$13.50877)`

Market-to-book​ ratio=3.44591 times