The ratio of a stock€™s market price to its book value per share reveals how much investors are willing to pay for each $1 of a company€™s net assets per share. The following information is available for companies A, B, and C.

Required:
(a) For each of the companies listed, compute the book value per share and the market price to book value ratio. (Note: None of the companies have preferred stock outstanding.)
(b) How is it possible for a company€™s market price to book value ratio to differ significantly from 1.0?

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Total assets Total liabilities Number of Company A COmpanTB CompanyC S3,000,000 $2,250,000 $6,000,000 750,000 ,200,000 4,500,000 common shares outstanding 300,000 600,000 375,000 Year-end per share stock price 25.13 s217 32.16