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A firm has current assets that could be sold for their book value of $32 million....

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Finance

A firm has current assets that could be sold for their bookvalue of $32 million. The book value of its fixed assets is $70million, but they could be sold for $100 million today. The firmhas total debt with a book value of $50 million, but interest ratedeclines have caused the market value of the debt to increase to$60 million. What is the ratio of the market value of equity to itsbook value? (Round your answer to 2 decimalplaces.)

Market-to-book ratio ?

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3.7 Ratings (370 Votes)

Formula Book Value (BV) Market Value (MV)
Current Assets (CA)                        32                      32
Fixed Assets (FA)                        70                    100
CA+FA Total assets (TA)                      102                    132
Debt (D)                        50                      60
TA - D Equity                        52                      72

Market value of equity to Book value ratio = 72/52 = 1.38
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A firm has current assets that could be sold for their bookvalue of $32 million. The book value of its fixed assets is $70million, but they could be sold for $100 million today. The firmhas total debt with a book value of $50 million, but interest ratedeclines have caused the market value of the debt to increase to$60 million. What is the ratio of the market value of equity to itsbook value? (Round your answer to 2 decimalplaces.)Market-to-book ratio ?

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