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7 August, 18:14

McHardie & Company has Total Equity of $129,600. There are 30,000 shares of common stock outstanding at a market price of $31.40 a share. What is the Market-to-Book ratio?

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  1. 7 August, 20:45
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    The Market-to-Book ratio is 7.27

    Explanation:

    Market to book value is the ratio of current market value of company's equity to book value of company's equity. it shows how market value the each $1 book value of share.

    Total Equity at book value = $129,600

    Outstanding shares = 30,000 shares

    Market price = $31.40

    Market value of outstanding shares = 30,000 x 31.40 = $942,000

    Market to book ratio = Market capitalization / Total book value

    Market to book ratio = $942,000 / 129,600

    Market to book ratio = 7.27 times
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