Here is a simplified balance sheet for Caterpillar Tractor: Caterpillar Tractor

Question

Here is a simplified balance sheet for Caterpillar Tractor: Caterpillar Tractor Balance Sheet ($ in millions)   Current assets $ 42,529 Current liabilities $ 29,750   Long-term assets 46,842 Long-term debt 27,757 Other liabilities 14,327 Equity 17,537   Total $ 89,371 Total $ 89,371 Caterpillar has 662 million shares outstanding with a market price of $88 a share. a. Calculate the company’s market value added. (Enter your answers in millions.)   Market value _________$  million   Market value added _________$  million b. Calculate the market-to-book ratio. (Round your answer to 2 decimal places.)   Market-to-book ratio ________________ c. Has the company created value for shareholders? Yes No Here is a simplified balance sheet for Caterpillar Tractor:

Explanation / Answer

Market value $58,256 million

Market value added $40719 million

book value per share:

Stockholders' Equity - Preferred Stock/Average shares outstanding=

=17537/662=26.49

Market-to-book ratio:88/26.49=3.32

c.yes

  Market-to-book ratio:

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