A firm has current assets that could be sold for their book value of $38 million
ID: 2760961 • Letter: A
Question
A firm has current assets that could be sold for their book value of $38 million. The book value of its fixed assets is $76 million, but they could be sold for $106 million today. The firm has total debt with a book value of $56 million, but interest rate declines have caused the market value of the debt to increase to $66 million. What is the ratio of the market value of equity to its book value? (Round your answer to 2 decimal places.)
A firm has current assets that could be sold for their book value of $38 million. The book value of its fixed assets is $76 million, but they could be sold for $106 million today. The firm has total debt with a book value of $56 million, but interest rate declines have caused the market value of the debt to increase to $66 million. What is the ratio of the market value of equity to its book value? (Round your answer to 2 decimal places.)
Explanation / Answer
Market Value Of equity Book value Current Asset 38 38 Fixed asset 106 76 Total Assets 144 114 Liabilities 66 56 Equity 78 58 ratio of the market value of equity to its book value =78/58 1.34
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