Question

Use the following information for ECE incorporated: Shareholder Equity $100 million Assets $200 million Sales $300 million Net Income $15 million Interest Expense $2 million If ECE's stock is currently trading at $24.00 and ECE has 25 million shares outstanding, then ECE's market-to-book ratio is closest to:

Answer 1

6.0

Step-by-step explanation:

Market to book ratio is calculated as ; Market capitalization / Net book value.

Where,

Market capitalization = Price per share × Total shares outstanding

= $24 × 25,000,000 shares

= $600,000,000

Then,

Net book value = Total assets - Total liabilities

= $200,000,000 - $100,000,000

= $100,000,000

Therefore,

Market to book ratio = $600,000,000 / $100,000,000

= 6.0