Given the following information, compute the market to book ratio and discuss wh
ID: 2809905 • Letter: G
Question
Given the following information, compute the market to book ratio and discuss what it means for comparing these three companies:
Company
Ticker
Assets
Total Liabilities
Stock Price
Shares Outstanding
JC Penney
JCP
$9.3 Billion
$7.9 Billion
$3.84
310 Million
Kohl's Corp
KSS
$13.6 Billion
$8.4 Billion
$39.34
170.5 Million
Amazon
AMZN
$83.4 Billion
$64.1 Billion
$949.40
480.4 Million
If Kohl's has total debt of $4.5 billion and cash of $1.1 billion, what is its enterprise value? How would you interpret enterprise value?
Company
Ticker
Assets
Total Liabilities
Stock Price
Shares Outstanding
JC Penney
JCP
$9.3 Billion
$7.9 Billion
$3.84
310 Million
Kohl's Corp
KSS
$13.6 Billion
$8.4 Billion
$39.34
170.5 Million
Amazon
AMZN
$83.4 Billion
$64.1 Billion
$949.40
480.4 Million
If Kohl's has total debt of $4.5 billion and cash of $1.1 billion, what is its enterprise value? How would you interpret enterprise value?
Explanation / Answer
All figures in billions
total assets
total liabilities
net book value = total assets - total liabilities
stock price
no of shares outstanding
market capitalization = stock price*no of shares outstanding
Market to book ratio = market capitalization/net book value
JC penny
9.3
7.9
1.4
3.84
0.31
1.1904
0.85
Kohl corp
13.6
8.4
5.2
39.34
0.1705
6.70747
1.29
Amazon
83.4
64.1
19.3
949.4
0.4804
456.0918
23.63
Enterprise value
market value of common stock + market value of debt - cash
6.707 + 4.5 -1.1
10.107
All figures in billions
total assets
total liabilities
net book value = total assets - total liabilities
stock price
no of shares outstanding
market capitalization = stock price*no of shares outstanding
Market to book ratio = market capitalization/net book value
JC penny
9.3
7.9
1.4
3.84
0.31
1.1904
0.85
Kohl corp
13.6
8.4
5.2
39.34
0.1705
6.70747
1.29
Amazon
83.4
64.1
19.3
949.4
0.4804
456.0918
23.63
Enterprise value
market value of common stock + market value of debt - cash
6.707 + 4.5 -1.1
10.107
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