Market-to-Book Ratio: Unlocking the Value of ABD Common Stock

How can we determine the market-to-book ratio for ABD common stock?

A. By dividing the earnings per share by the book value per share

B. By dividing the market value per share by the book value per share

C. By subtracting the earnings per share from the market value per share

D. By multiplying the market value per share by the book value per share

The market-to-book ratio for ABD common stock is 2.96.

Explanation: The market-to-book ratio is a financial metric used to evaluate the relationship between a company's market value and its book value. In this case, the market-to-book ratio for ABD common stock is calculated by dividing the market value per share by the book value per share.

To calculate the market-to-book ratio, we use the formula:

Market-to-Book Ratio = Market Value per Share / Book Value per Share

Given that the market value per share is $36.08 and the book value per share is $12.19, we can plug in these values:

Market-to-Book Ratio = $36.08 / $12.19 = 2.96

Therefore, the market-to-book ratio for ABD common stock is 2.96. This ratio allows investors to understand how the market is valuing the company compared to its balance sheet value. A lower ratio indicates that the stock may be undervalued, while a higher ratio may suggest it is overvalued.