value: A firm has current assets that could be sold for their book value of $44

Question

value: A firm has current assets that could be sold for their book value of $44 million. The book value of ts fixed assets is S82 million, but they could be sold for $112 million today. The firm has total debt with a book value of $62 million, but interest rate declines have caused the market value of the debt to increase to $72 million. What is the ratio of the market value of equity to its book value? (Round your answer to 2 I places.) References eBook & Resources Worksheet to estimate firm 19

Explanation / Answer

Book value of asset :current asset +fixed asset

         = 44+82=126

Book value of debt= 62

Book value of equity =Asset -debt

              = 126- 62

                = $ 64

now,Market value of asset =44+112=156

Debt :72

Market value of equity =156-72= 84

market to book ratio =Market value of equity /market value of debt

            =84/64

          = 1.31

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.