n 2015, Caterpillar Inc. had about 730 million shares outstanding. Their book value was $30.0 per share, and the market price was $87.00 per share. The company's balance sheet shows that the company had $30.50 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.)

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Business

Jermaine Gaines

10 July, 05:57

n 2015, Caterpillar Inc. had about 730 million shares outstanding. Their book value was $30.0 per share, and the market price was $87.00 per share. The company's balance sheet shows that the company had $30.50 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.)

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Answers (1)

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Leila Yu · Answer 1

The book debt-to-value ratio is 0.57

Explanation:

The computation of the book debt-to-value ratio is shown below:

Book debt-to-value ratio = (Book value) : (book value of debt)

where,

Book value is $30.0 per share

Book value of debt = Outstanding shares * book value + long term debt

= 0.730 * $30 + $30.50

= $21.90 + $30.50

= $52.40

Now put these values to the above formula

So, the value would equal to

= $30.00 : $52.40

= 0.57