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Delvig [45]
2 years ago
11

n December ​, General Electric​ (GE) had a book value of equity of ​billion, billion shares​ outstanding, and a market price of

per share. GE also had cash of ​billion, and total debt of billion. a. What was​ GE's market​ capitalization? What was​ GE's market-to-book​ ratio? b. What was​ GE's book​ debt-equity ratio? What was​ GE's market​ debt-equity ratio? c. What was​ GE's enterprise​ value?
Business
1 answer:
Gennadij [26K]2 years ago
5 0

Answer:

a. GE's market capitalization = 276.60 billion; and GE's market-to-book ratio = 2.85.

b. GE's book debt-equity ratio = 2.08; and GE's market debt-equity ratio = 0.73

c. GE's enterprise value = $374.26 billion

Explanation:

Note: This question is not complete as all its data are omitted. The complete question is therefore provided before answering the question as follows:

In December 2015, General Electric (GE) had a book value of equity of $97.1 billion, 9.2 billion shares outstanding, and a market price of $30.06 per share. GE also had cash of $103.9 billion, and total debt of $201.7 billion. a. What was GE's market capitalization? What was GE's market-to-book ratio? b. What was GE's book debt-equity ratio? What was GE's market debt-equity ratio? c. What was GE's enterprise value?

The explanation to the answer is now provided as follows:

a. What was​ GE's market​ capitalization? What was​ GE's market-to-book​ ratio?

Calculation of GE's market​ capitalization

Market​ capitalization = Number of shares outstanding * market price per share = 9.2 billion * $30.06 = 276.60 billion

Calculation of GE's market-to-book​ ratio

Market-to-book​ ratio = Market capitalization / Book value of equity = $276.552 billion / $97.1 billion = 2.85

b. What was GE's book debt-equity ratio? What was GE's market debt-equity ratio?

Calculation of GE's book debt-equity ratio?

Book debt-equity ratio = Total debt / Book value of equity = $201.7 billion / $97.1 billion = 2.08

Calculation of GE's market debt-equity ratio

Market debt equity ratio = Total debt / Market​ capitalization = $201.7 billion / $276.46 billion = 0.73

c. What was GE's enterprise value?

Enterprise value = Market capitalization + Total debt - cash = $276.46 billion + $201.7 billion - $103.9 billion = $374.26 billion

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