Determine the price-book ratio


Response to the following problem:

Below are some financial statistics for Google, the Web search engine provider, and Burlington Northern Santa Fe, a large North American railroad (all numbers in thousands, except per share amounts).

                                                                     Burlington Google      Northern Santa Fe

Total stockholders' equity, Dec. 31, 2004          $2,929,056,000           $9,311,000,000

Common shares outstanding, Dec. 31, 2004        193,176,000              376,800,000

Market price, Dec. 31, 2004                             $193 per share           $ 47 per share

a. Determine the price-book ratio for each company. Round to two decimal places.

b. Explain the difference in the price-book ratio between the two companies.

 

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Financial Accounting: Determine the price-book ratio
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