In early 2015,Ford Motor (F) had a book value of equity of $24.6 billion, 3.9 billion...
In early 2015,Ford Motor (F) had a book value of equity of $24.6 billion, 3.9 billion shares outstanding, and a market price of $15.84 per share. Ford also had cash of
$ 21.6 billion, and total debt of $119.5 billion. Three years later, in early 2018, Ford had a book value of equity of $34.8 billion,10.3 billion shares outstanding with a market price of
$ 11.81 per share, cash of $26.9 billion, and total debt of $159.2 billion. Over this period, what was the change in Ford's a. market capitalization?
b. market-to-book ratio?
c. enterprise value?
Homework Answers
In early 2015,Ford Motor (F) had a book value of equity of $24.6 billion, 3.9 billion shares outstanding, and a market price of $15.84 per share. Ford also had cash of
$ 21.6 billion, and total debt of $119.5 billion. Three years later, in early 2018, Ford had a book value of equity of $34.8 billion,10.3 billion shares outstanding with a market price of
$ 11.81 per share, cash of $26.9 billion, and total debt of $159.2 billion. Over this period, what was the change in Ford's a. market capitalization?
b. market-to-book ratio?
c. enterprise value?
2015
Market Capitalization = No. of shares outstanding * Value of shares in Market
Market Capitalization in 2015 = 3.9 Bn * 15.85 = 61.815 Bn
Market to Book Vlaue = Market Capitalization / Book Values
= 61.815 Bn / 24.6
= 2.51 times
Enterprise Value = market Cap + Debt Value - Cash
= 61.815 Bn + 119.5 Bn - 21.6 Bn
= 159.715 Bn
2018
Market Capitalization = No. of shares outstanding * Value of shares in Market
Market Capitalization in 2015 = 10.3 Bn * 11.81 = 121.643 Bn
Market to Book Vlaue = Market Capitalization / Book Values
= 121.643 Bn / 34.8
= 3.50 times
Enterprise Value = market Cap + Debt Value - Cash
=121.643 Bn + 159.2 Bn - 26.9 Bn
= 253.943 Bn
Market Cap changes from 61.815 Bn to 121.643 Bn
Market to Book Value chneged from 2.51 to 3.5 times
Enterprise Value changed from 159.715 Bn to 253.943 Bn
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