Lancaster Bakery has net fixed assets of $329,700,current assets of $87,200,a price-earnings ratio of 12.8,a debt-equity ratio of 0.42,and earnings per share of $1.97.What is the market-to-book ratio if there are 36,000 shares of stock outstanding?
A)3)09 times
B)2)79 times
C)2)24 times
D)3)46 times
E)3)80 times

Question

Quizplus · Accepted Answer

Equity multiplier = 1 + 0.42 = 1.42
Total equity = ($87,200 + $329,700)/ (1 + 0.42)= $293,591.55
Market-to-book ratio = (12.8 × $1.97)/ ($293,591.55 / 36,000)= 3.09 times

Lancaster Bakery Has Net Fixed Assets of $329,700,current Assets of $87,200,a