Question

Jericho Motors has $4 billion in total assets. The other side of its balance sheet consists of $0.4 billion in current liabilities, $1.2 billion in long-term debt, and $2.4 billion in common equity. The company has 500 million shares of common stock outstanding, and its stock price is $25 per share. What is Jericho’s market-to-book ratio?

Answer 1

Answer:

market to book ratio 5.208

Explanation:

4 billion assets

0.4 current liabilities

1.2 long term debt

2.4 common equity

500 millions shares x $25 each = 12,500 million = 12.5 billion market capitalization

market to book ratio:

$\frac{market  \: capitalization}{book \: value}$

12.5 / 2.4 = 5.208 times