The financial statements of Burnaby Mountain Trading Company are given below. Note: The common shares are trading in the stock market for $27 each.
-Refer to the financial statements of Burnaby Mountain Trading Company.The firm's market-to-book-value for 2008 is _________.
A) 0.1708
B) 0.1529
C) 0.1462
D) 0.1636

Question

The financial statements of Burnaby Mountain Trading Company are given below.  Note: The common shares are trading in the stock market for $27 each.
-Refer to the financial statements of Burnaby Mountain Trading Company.The firm's market-to-book-value for 2008 is _________.
A) 0.1708 
B) 0.1529 
C) 0.1462 
D) 0.1636

Quizplus · Accepted Answer

Market Value of Equity (MVE) = 187,500 common shares x $27 per share = $5,062,500.
Book Value of Equity (BVE) = Total Shareholders’ Equity = $4,687,500.
Market-to-Book Ratio = MVE/BVE = $5,062,500/$4,687,500 = 1.08.
Therefore, the market-to-book-value for 2008 is 0.1636 (rounded to four decimal places). The correct answer is D.

The Financial Statements of Burnaby Mountain Trading Company Are Given