Defined here as total liabilities divided by total assets

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Reference no: EM131225050

A company’s book-value based debt ratio (defined here as total liabilities divided by total assets) is 67.4% which strikes me as being a little too high relative to the competition. I decide to recalculate the debt ratio using market-value based information. From the notes to the financials the company has revealed that the total market value of their interest-bearing debt currently totals $1.9 Billion and from the balance sheet I determine that all other non interest-bearing debt and liabilities total $4.6 billion. I determine the price of the company’s stock as of the date of the balance sheet to be $32/share and the company currently has 203,125,000 shares of stock outstanding. Identify the true statement:

a. The market-value based total equity value is approximately $6.5 billion

b. Total market-value based assets equal approximately $13.0 billion

c. The market-value based debt ratio is approximately 50.0%

d. All of the statements above are true

e. All of the statements above are false

Reference no: EM131225050

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