GenCorp has a total debt of $140 million and stockholders' equity of $50 million.It also has 25 million shares outstanding,with a market price of $3.50 per share.What is GenCorp's market debt-equity ratio?
A)0.36
B)0.63
C)1.02
D)1.60

Question

Quizplus · Accepted Answer

The market value of equity is 25 million shares * $3.50 = $87.5 million. The market debt-equity ratio is total debt ($140 million) divided by market value of equity ($87.5 million), which equals 1.60.

GenCorp Has a Total Debt of $140 Million and Stockholders