The market-to-book ratio is measured as:
A)market value of equity per share divided by book value of equity per share.
B)market price per share of stock divided by earnings per share.
C)net income divided by market price per share of stock.
D)net income times market price per share of stock.
E)total equity divided by total assets.

Question

Quizplus · Accepted Answer

The market-to-book ratio is calculated by dividing the market value of equity per share by the book value of equity per share. This ratio indicates the degree to which the market price of a stock exceeds its book value. A high market-to-book ratio can be an indication of investor optimism about a company's future prospects.

The Market-To-Book Ratio Is Measured As