Question

A firm has $770 million in total​ assets, no preferred​ stock, and total liabilities of $380...

A firm has $770 million in total​ assets, no preferred​ stock, and total liabilities of $380 million. There are 310 million shares of common stock outstanding. The stock is selling for $5.17 per share. What is the​ price-to-book-value ratio?

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Answer #1
Price-to-book-value ratio = Market Price per Share / Book Value per Share
= $       5.17 / $       1.26
=           4.11
Working:
# 1: Calculation of total book value of equity
Total Equity = Total assets - Total Liabilities
= $ 770.00 - $ 380.00
= $ 390.00
# 2:Calculation of book value per share
Book Value per share = Total Equity / Number of shares outstanding
= $ 390.00 /            310
= $       1.26
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