The above diagram shows a balance sheet for a certain company. All quantities shown are in millions of dollars. If the company has 5 million shares outstanding, and these shares are trading at a price of $6.39 per share,
Balance Sheet
Assets Liabilities
Current Assets Current Liabilities
Cash 53 Accounts payable 40
Accounts receivable 23 Notes payable/short-term debt 5
Inventories 17
Total current assets 93 Total current liabilities 45
Long-Term Assets Long-Term Liabilities
Net property, plant,
and equipment 117 Long-term debt 133
Total long-term assets 117 Total long-term liabilities 133
Total Liabilities 178
Stockholders' Equity 32
Total Assets 210 Total Liabilities and 210
Stockholders' Equity
what does this tell you about how investors view this firm's book value?
A) Investors consider that the firm's market value is worth very much less than its book value.
B) Investors consider that the firm's market value is worth less than its book value.
C) Investors consider that the firm's market value and its book value are roughly equivalent.
D) Investors consider that the firm's market value is worth more than its book value.
Answer: C
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