Mountain Top Markets has total assets of $48,700, net working capital of $1,100, and retained earnings...
Mountain Top Markets has total assets of $48,700, net working capital of $1,100, and retained earnings of $21,200. The firm has 12,500 shares of stock outstanding with a par value of $1 per share and a market value of $7.10 per share. The stock was originally issued to the firm's founders at par value. What is the market-to-book ratio?
A) 3.19
B) 2.22
C) 2.78
D) 3.03
E) 2.63
Homework Answers
Answer is 2.63
market-to-book ratio=Market price per share / Book Value
Book Value per share=networth/No of Share outstanding
Book Value per share=(12500*1$+$21200)/12500=$2.70
market-to-book ratio=7.10/2.70=2.63
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