A firm has current assets which could be sold for their book value of $10 million.The book value of its fixed assets is $60 million but they could be sold for $95 million today.The firm has total debt at a book value of $40 million but interest rate changes have increased the value of the debt to a current market value of $50 million.This firm's market to book ratio is ________.

Question

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The market value of the firm's assets is $10 million (current assets) + $95 million (fixed assets) = $105 million. The market value of the firm's equity is $105 million (total market value of assets) - $50 million (market value of debt) = $55 million. The book value of the firm's equity is $10 million (current assets) + $60 million (fixed assets) - $40 million (book value of debt) = $30 million. The market to book ratio is $55 million / $30 million = 1.83.

A Firm Has Current Assets Which Could Be Sold for Their