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Fundamentals of Financial Manageme...
MARKET/BOOK RATIO Edelman Engines has $17 billion in total assets. Its balance sheet shows $1.7 billion in current liabilities, $10.2 billion in long-term debt, and $5.1 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $20 per share. What is Edelman’s market/book ratio?
To determine: E Company’s market/book ratio.
Introduction:
Market/Book Ratio:
It represents the relationship between market price per share and the book value per share. More is the market/book ratio better is the firm’s condition.
Given,
Stock price is $20 per share.
Formula to calculate market/book ratio,
Substitute $20 for market price per share and $17 for book value per share (working note) in the above formula,
Here, market/book ratio is
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