If a Firm's Total Book Value of Assets Is $200

question 23

Multiple Choice

If a firm's total book value of assets is $200 million and total liabilities are $120 million, what is the market-to-book ratio if the firm issues 5 million shares of common stock?

• A) 1.0
• B) 1.5
• C) 2.0
• D) 2.5

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Definitions:

Income Allocation

The process of distributing a company's earnings or an investment's returns among various stakeholders or investment accounts.

Remainder Portion

The part of an estate that remains after all debts, taxes, expenses, and specific bequests have been paid or distributed, often transferred to the remainderman as specified in a will or trust.

Capital Contributions

Value or assets provided to a company by its owners or shareholders to support the business and its operations.

Income Distribution

The process of dividing and allocating income earned by a business to its stakeholders or investment products.