Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then using the market value of equity, the debt-equity ratio for Luther in 2006 is closest to ________

Question

Luther Corporation
Consolidated Balance Sheet
December 31, 2006 and 2005 (in $ millions)
Assets 2006 2005 Liabilities and
Stockholders' Equity 2006 2005
Current Assets Current Liabilities
Cash 57.6 58.5 Accounts payable 86.0 73.5
Accounts receivable 55.2 39.6 Notes payable / short-term debt 10.5 9.6
Inventories 45.6 42.9 Current maturities of long-term debt 39.6 36.9
Other current assets 5.6 3.0 Other current liabilities 6.0 12.0
Total current assets 164.0 144.0 Total current liabilities 142.1 132.0

Long-Term Assets Long-Term Liabilities
Land 66.4 62.1 Long-term debt 231.3 168.9
Buildings 108.3 91.5 Capital lease obligations
Equipment 114.3 99.6
Less accumulated
depreciation (54.4) (52.5) Deferred taxes 22.8 22.2
Net property, plant, and
equipment 234.6 200.7 Other long-term liabilities --- ---
Goodwill 60.0 -- Total long-term liabilities 254.1 191.1
Other long-term assets 63.0 42.0 Total liabilities 396.2 323.1
Total long-term assets 357.6 242.7 Stockholders' Equity 125.4 63.6

Total Assets 521.6 386.7 Total liabilities and Stockholders' Equity 521.6 386.7

A) 3.45
B) 1.72
C) 0.86
D) 2.41

Answer 1

Answer: B