Luther Corporation
Consolidated Balance Sheet
December 31, 2006 and 2005 (in $ millions)

Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then using the market value of equity, the debt-equity ratio for Luther in 2006 is closest to ________.
A) 3.45
B) 1.72
C) 0.86
D) 2.41

Question

Luther Corporation
Consolidated Balance Sheet
December 31, 2006 and 2005 (in $ millions)

Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then using the market value of equity, the debt-equity ratio for Luther in 2006 is closest to ________.
A) 3.45 
B) 1.72 
C) 0.86 
D) 2.41

Quizplus · Accepted Answer

B) D / E = Total debt / Total equity
Total Debt = Notes payable (10.5) + 11eaabab_c0c9_5ae7_b90e_853b432db658_TB5536_11 11eaabab_c0c9_5ae8_b90e_cb0728995c7f_TB5536_11 11eaabab_c0c9_5ae9_b90e_c3418ae84ef0_TB5536_11

Luther Corporation Consolidated Balance Sheet