In 2020, Caterpillar Incorporated had about 540 million shares outstanding. Their book value was $25.36 per share, and the market price was $153.70 per share. The company’s balance sheet shows that the company had $26.7 billion of long-term debt, which was currently selling near par value.What was Caterpillar’s book debt-to-value ratio?Note: Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.What was its market debt-to-value ratio?Note: Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.Which measure should you use to calculate the company’s cost of capital?

The weighted average cost of capital refers what is the average cost of capital. The company raises…

Answered: In 2020, Caterpillar Incorporated had…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In 2020, Caterpillar Incorporated had about 540 million shares outstanding. Their book value was $25.36 per share, and the market price was $153.70 per share. The company’s balance sheet shows that the company had $26.7 billion of long-term debt, which was currently selling near par value.

What was Caterpillar’s book debt-to-value ratio?

Note: Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.
What was its market debt-to-value ratio?

Note: Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.
Which measure should you use to calculate the company’s cost of capital?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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