Answer:
So, if market/book ratio = 1.8. and book value is given as: Stockholders' equity as reported on the firm’s balance sheet = $2 billion
Market Capitalization = 1.8 * 2 = $3.6 billion
Number of shares = common shares outstanding = 230 million,
Hence price per share = $3.6 billion / 230 million shares =$15.65
Explanation:
Stockholders' equity as reported on the firm’s balance sheet = $2 billion, price/earnings ratio = 14.5,
common shares outstanding = 230 million,
and market/book ratio = 1.8.
The firm's market value of total debt is $5 billion, the firm has cash and equivalents totaling $290 million,
and the firm's EBITDA equals $1 billion.
Therefore the price of a share of the company's common stock can be derived from the market/book ratio.
<u>The Market to Book ratio is the company's current market value relative to its book value, and by extension market value is derived from the current stock price of all outstanding shares </u>
So, if market/book ratio = 1.8. and book value is given as: Stockholders' equity as reported on the firm’s balance sheet = $2 billion
Market Capitalization = 1.8 * 2 = $3.6 billion
Number of shares = common shares outstanding = 230 million,
Hence price per share = $3.6 billion / 230 million shares =$15.65
