Calculate one more ratio from the information

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According to the financial statements for Global Telecom Inc., the firm has total assets valued at $320 million and total liabilities of $200 million. Last year, the company had a total after tax earnings of $12million. Company records indicate that the firm has issued 2 million shares of stock and it has a current market value of $70 a share.

a. Based on the market to book ratio of the company, will you recommend buying the shares? Why?

b. Calculate one more ratio from the information given and explain how you will use the information.

c. The firm is in fact one of the first movers in the 5G business. Will your answer to a) change given this new piece of information? Explain the potential pitfall of using the market to book ratio in this situation.

Reference no: EM132923898

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