In November 2009, Perrigo Co. (PRGO) had a share price of $39.20. They had 91.33 million shares outstanding, a market-to-book ratio of 3.76. In addition, PRGO had $845.01 million in outstanding debt, $163.82 million in net income, and cash of $257.09 million. Perrigo's market debt to equity ratio is closest to: A) 0.24 B) 0.50 C) 0.75 D) 0.89

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 18P
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In November 2009, Perrigo Co. (PRGO) had a share price of $39.20.  They had 91.33 million shares outstanding, a market-to-book ratio of 3.76.  In addition, PRGO had $845.01 million in outstanding debt, $163.82 million in net income, and cash of $257.09 million.

Perrigo's market debt to equity ratio is closest to:

A) 0.24

B) 0.50

C) 0.75

D) 0.89

 

Expert Solution
Step 1

Price per share = $39.20

Number of shares = 91.33 million

Market value of equity = Price*Number of shares

                                        = 39.20*91.33

                                        = $3580.136 million

Debt value = $845.01 million

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