Use the table for the question(s)below.
Consider the following balance sheet:

-Luther Corporation's stock price is $39 and the company has 20 million shares outstanding. Its book value Debt -Equity Ratio for 2012 is closest to:
A)2.29
B)0.31
C)1.89
D)0.37

Question

Use the table for the question(s)below.
Consider the following balance sheet:
  
-Luther Corporation's stock price is $39 and the company has 20 million shares outstanding. Its book value Debt -Equity Ratio for 2012 is closest to:
A)2.29 
B)0.31 
C)1.89 
D)0.37

Quizplus · Accepted Answer

Debt-to-equity ratio = Total debt / Total equityTotal debt = $0Total equity = Book value of equity = Number of shares outstanding * Book value per shareBook value per share = Book value of equity / Number of shares outstandingBook value of equity = $39 * 20 million = $780 millionBook value per share = $780 million / 20 million = $39Debt-to-equity ratio = $0 / $780 million = 0The closest choice to 0 is 0.31.

Use the Table for the Question(s)below