Question

Winston Watch's stock price is $70 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 400 million shares of common stock outstanding. What is Winston's market/book ratio? Do not round intermediate calculations. Round your answer to two decimal places.

Answer 1

The Market/book ratio is 5.67.

Step-by-step explanation:

Book value per share = (common equity)/(number of shares)

= ($ 6 billion)/($ 400million )

= $ 15 per share

Market/book ratio = (market price per share)/(book value per share

= $75/$15

= 5.00

Therefore, the Market/book ratio is 5.67.