1) In general, a successful firm will have a market-to-book ratio that is substantially greater than 1.

Use the table for the question(s) below.

Luther Corporation

Consolidated Balance Sheet

December 31, 2006 and 2005 (in $ millions)

Assets	2006	2005		Liabilities and Stockholders' Equity	2006	2005
Current Assets				Current Liabilities
Cash	63.6	58.5		Accounts payable	87.6	73.5
Accounts receivable	55.5	39.6		Notes payable / short-term debt	10.5	9.6
Inventories	45.9	42.9		Current maturities of long-term debt	39.9	36.9
Other current assets	6.0	3.0		Other current liabilities	6.0	12.0
Total current assets	171.0	144.0		Total current liabilities	144.0	132.0
Long-Term Assets				Long-Term Liabilities
Land	66.6	62.1		Long-term debt	239.7	168.9
Buildings	109.5	91.5		Capital lease obligations	---	---
Equipment	119.1	99.6		Total Debt	239.7	168.9
Less accumulated depreciation	(56.1)	(52.5)		Deferred taxes	22.8	22.2
Net property, plant, and equipment	239.1	200.7		Other long-term liabilities	---	---
Goodwill	60.0	--		Total long-term liabilities	262.5	191.1
Other long-term assets	63.0	42.0		Total liabilities	406.5	323.1
Total long-term assets	362.1	242.7		Stockholders' Equity	126.6	63.6
Total Assets	533.1	386.7		Total liabilities and Stockholders' Equity	533.1	386.7

2) Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then Luther's market-to-book ratio would be closest to:

A) 0.39

B) 0.76

C) 1.29

D) 2.57

3) Refer to the balance sheet above. When using the book value of equity, the debt-equity ratio for Luther in 2006 is closest to:

A) 2.21

B) 2.29

C) 2.98

D) 3.03

4) Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then using the market value of equity, the debt-equity ratio for Luther in 2006 is closest to:

A) 1.71

B) 1.78

C) 2.31

D) 2.35

5) Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then what is Luther's enterprise value?

A) -$63.3 million

B) $353.1 million

C) $389.7 million

D) $516.9 million

6) Refer to the balance sheet above. Luther's current ratio for 2006 is closest to:

A) 0.84

B) 0.87

C) 1.15

D) 1.19

7) Refer to the balance sheet above. Luther's quick ratio for 2005 is closest to:

A) 0.77

B) 1.31

C) 1.09

D) 0.92

8) Refer to the balance sheet above. The change in Luther's quick ratio from 2005 to 2006 is closest to:

A) a decrease of 0.10

B) an increase of 0.10

C) a decrease of 0.15

D) an increase of 0.15

9) Refer to the balance sheet above. If on December 31, 2005 Luther has 8 million shares outstanding trading at $15 per share, then what is Luther's market-to-book ratio?

10) Refer to the balance sheet above. If on December 31, 2005 Luther has 8 million shares outstanding trading at $15 per share, then what is Luther's enterprise value?