Balance Sheet 2009 2008 Cash Accounts receivable Inventory Total current assets

Question

Balance Sheet 2009 2008 Cash Accounts receivable Inventory Total current assets Fixed assets Total assets $ 200,000 1,200,000 1,840,000 $ 3,240,000 3,200,000 $ 6,440,000 $ 50,000 950,000 1,500,000 S 2,500,000 3,000,000 S 5,500,000 Accounts Payable Bank loan Total current liabilities Bond payable Total liabilities $ 800,000 600,000 $ 1,400,000 900,000 $ 2,300,000 $ 300,000 3,840,000 $ 6,440,000 $ 720,000 100,000 S 820,000 ,000,000 S 1,820,000 $ 300,000 3,380,000 S 5,500,000 Common stock (130,000 shares) Retained earnings Total liabilities &equity; Note: The common shares are trading in the stock market for $40 each Refer to the financial statements of Black Barn Company. The firm's market-to-book value for 2009 is Show all calculations

Explanation / Answer

Market-to-book value for 2009 1.26 Working: a. Market Value of shares = Number of shares of common stock x Market price per share =              1,30,000 x $                      40 = $        52,00,000 b. Book Value of shares = Common Stock + Retained Earning = $          3,00,000 + $       38,40,000 = $        41,40,000 c. Market-to-book value for 2009 = Market Value of shares / Book Value of shares = $        52,00,000 / $       41,40,000 = 1.26

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