A public company has a book value of $128 million.They have 20 million shares outstanding,with a market price of $4 per share.Which of the following statements is true regarding this company?
A)Investors may consider this firm to be a growth company.
B)Investors believe the company's assets are not likely to be profitable its market value is worth less than its book value.
C)The firm's market value is more than its book value.
D)The value of the firm's assets are greater than their liquidation value.

Question

Quizplus · Accepted Answer

The market value ($80 million) is less than the book value ($128 million), suggesting investors may believe the company's assets are not likely to be profitable.

A Public Company Has a Book Value of $128 Million