Secure Energy Services has 20 million shares outstanding,with a current share price of $12.15 per share.If the firm's market-to-book ratio is 4.5,what is the firm's book value of equity?
A)$7.4 million
B)$54 million
C)$20 million
D)$90 million
E)$243 million

Question

Quizplus · Accepted Answer

The market value of equity is calculated as the number of shares outstanding multiplied by the current share price: 20 million shares * $12.15 = $243 million. The market-to-book ratio is the market value of equity divided by the book value of equity. Rearranging the formula gives the book value of equity as market value of equity divided by the market-to-book ratio: $243 million / 4.5 = $54 million.

Secure Energy Services Has 20 Million Shares Outstanding,with a Current