Use the table for the question(s)below.
Consider the following balance sheet:
-Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its Market value Debt-Equity Ratio for 2009 is closest to:
A)2.29.
B)0.37.
C)1.89.
D)0.31.

Question

Use the table for the question(s)below.
Consider the following balance sheet:  
-Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its Market value Debt-Equity Ratio for 2009 is closest to:
A)2.29. 
B)0.37. 
C)1.89. 
D)0.31.

Quizplus · Accepted Answer

To find the market value debt-equity ratio, we need the market value of equity and the market value of debt. The market value of equity is the stock price multiplied by the number of shares outstanding: $39 * 20 million = $780 million. Without the market value of debt provided, we assume the ratio given in the options is calculated based on known values. The closest ratio to typical debt-equity ratios is 0.37.

Use the Table for the Question(s)below