### Balance sheet for a certain company

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##### Reference no: EM13826958

Problem:

1. Use the figure for the following question

 Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash 50 Accounts Payable 42 Accounts receivable 22 Notes Payable/ short-term debt 7 Inventories 17 Total Current Assets 89 Total Current Liabilities 47 Long-Term Assets Long-Term Liabilities Net Property, Plant and Equipment 121 Long-term debt 128 Total Long-term Assets 121 Total long-term debt 128 Total Liabilities 177 Shareholders' Equity 33 Total Assets 210 Total Liabilities And Shareholders' Equity 210

The above table shows a balance sheet for a certain company. All quantities shown are in millions of dollars. If the company has 4 million shares outstanding and these shares are trading at a price of \$8.24 per share, 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.

2. Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage?

A. Debt-equity or equity multiplier ratio

B. Market-to-book ratio

C. Market debt-equity ratio

D. Current or quick ratio

Summary of problem:

These short questions are from Finance. The 1st question is about checking whether the book value of shares is similar to the market value of the shares. The 2nd question is about the measure used to assess the financial health of a firm with its leverage.

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