4 Jaster Jets has 10 billion in total assets Its balance she

4. Jaster Jets 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 800 million shares of common stock outstanding, and its stock price is $32 per share. What is Taster\'s market/book ratio?

Solution

Market value of shares:

= 800 million×$32

= $25,600 million

Book value of equity:

= $10,000 million-$1,000 million-$3,000 million

= $6,000 million

Market to book ratio:

= $25,600 million/$6,000 million

= 4.27 times