In 2015, Caterpillar Inc. had about 581 million shares outstanding. Their book v

Question

In 2015, Caterpillar Inc. had about 581 million shares outstanding. Their book value was $38.3 per share, and the market price was $71.00 per share. The company’s balance sheet shows that the company had $26.20 billion of long-term debt, which was currently selling near par value. a. What was Caterpillar’s book debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) b. What was its market debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.)

Explanation / Answer

a.

b.

Book value calculation Capital Number of units Book value per unit Book value Equity          581,000,000 38.30          22,252,300,000 Debt          26,200,000,000 A Total book value          48,452,300,000 B Book value of debt          26,200,000,000 C=B/A *100 Book debt to value ratio 54.07%

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