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3. Problem 7-03 (Market-Book Ratio) eBook Market/Book Ratio Winston Watchs stock price is $80 per share. Winston has $10 bil

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Answer #1

The market / book ratio is computed as shown below:

= Market price per share / book value per share

Book value per share is computed as follows:

= Common equity / Number of shares outstanding

= $ 6,000 million / 450 million

= $ 13.3333333

So, the market to book ratio will be as follows:

= $ 80 / $ 13.3333333

= 6

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