In December 2015, General Electric (GE) had a book value of equity of $98 billion, 9.4...
In December 2015, General Electric (GE) had a book value of equity of $98 billion, 9.4 billion shares outstanding, and a market price of $31 per share. GE also had cash of $102 billion, and total debt of $199 billion.
a.What was GE’s market capitalization? What was GE’s market-to-book ratio? How is GE's management performance?
b.What was GE’s book debt-equity ratio? What was GE’s market debt-equity ratio? What information can you get based on your calculation?
c.What was GE’s enterprise value?
***Answer needs to be shown as it would be in Excel format
Homework Answers
Answer to Part a.
Market Capitalization = Number of Shares outstanding * Market
Price per Share
Market Capitalization = 9.4 Billion * $31
Market Capitalization = $291.40 Billion
Market to Book Ratio = Market Value / Book Value
Market to Book Ratio = $291.40 Billion / $98 Billion
Market to Book Ratio = 2.97
Answer to Part b.
Book Debt- Equity Ratio = Book Value of Debt / Book Value of
Equity
Book Debt- Equity Ratio = $199 Billion / $98 Billion
Book Debt- Equity Ratio = 2.03
Market Debt- Equity Ratio = Market Value of Debt / Market Value
of Equity
Market Debt- Equity Ratio = $199 Billion / $291.40 Billion
Market Debt- Equity Ratio = 0.68
Answer to Part c.
Enterprise Value = Market Capitalization + Debt – Cash
Balance
Enterprise Value = $291.40 Billion + $199 Billion - $102
Billion
Enterprise Value = $388.40 Billion
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