Firm Value

home / study / questions and answers / business / finance / pfizer (pfe) – http://finance.yahoo.com/q/ks?s=pfe+key+statistics…

Question

Pfizer (PFE) – http://finance.yahoo.com/q/ks?s=PFE+Key+Statistics

Coca-Cola (KO) – http://finance.yahoo.com/q/ks?s=KO+Key+Statistics

Construct the Book Debt Ratio and Market Debt Ratio for both firms. Assume that book value of debt approximates its market value. How does debt as a proportion of firm value change as you switch from book to market values?

Book Debt Ratio � Book Debt / (Book Dept + Book Equity)

Market Dept Ratio* – Book Debt / (Book Dept + Market Equity)

  • Assuming that Book Debt Approximates Market Debt