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Problem 3-3 Market/Book Ratio Winston Washers' stock price is $60 per share. Winston has $10 billion...

Problem 3-3 Market/Book Ratio Winston Washers' stock price is $60 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 700 million shares of common stock outstanding. What is Winston's market/book ratio? Round your answer to two decimal places. Do not round intermediate calculations.

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Answer #1

Market Value of Winston Washers Equity Value = Share price * Shares O/s

Market Value of Winston Washers Equity Value = $60 * 700 Million

Market Value of Winston Washers Equity Value = $42 Billion

Book Value of Winston Washers Equity Value = Assets - Outside Liabilities

Book Value of Winston Washers Equity Value = $10 Billion - $1 Billion - $3 Billion

Book Value of Winston Washers Equity Value = $6 Billion

Market/book ratio = Market Value / Book Value = $42 B / $6 B = 7 Times

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