A firm has a debt-to-equity ratio of 0.60 and a market-to-book ratio of 2.5. What is the ratio of the book value of debt to the market value of equity? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter5: Evaluating Operating And Financial Performance
Section5.4: Leverage Ratios
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A firm has a debt-to-equity ratio of 0.60 and a market-to-book ratio of 2.5. What is the ratio of the book value of debt to the market value of equity? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Step 1

Debt-to-equity ratio = Total liabilities / Total equity

Market-to-book ratio = Market price per share / Book price per share 

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