Use the Information for the Question(s)below

question 69

Multiple Choice

Use the information for the question(s) below.
Luther is a successful logistical services firm that currently has $5 billion in cash.Luther has decided to use this cash to repurchase shares from its investors,and has already announced the stock repurchase plan.Currently Luther is an all-equity firm with 1.25 billion shares outstanding.Luther's shares are currently trading at $20 per share.
-Assume that in addition to 1.25 billion common shares outstanding,Luther has stock options given to employees valued at $2 billion.The market value of Luther's non-cash assets is closest to:

• A)$22 billion.
• B)$20 billion.
• C)$25 billion.
• D)$18 billion.

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Definitions:

Retail Method

An inventory valuation method used in retail, estimating the ending inventory value by applying a cost-to-retail percentage to the sales at retail.

Cost Ratio

A measure used to evaluate the efficiency and profitability of a company, calculated as the cost of goods sold divided by net sales.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated for cost of goods sold and financial reporting purposes.

Retail Method

An accounting method used to estimate inventory value, calculated by adding the cost of goods purchased to the cost of the opening inventory and then subtracting the cost of goods sold.