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Homework answers / question archive / December 2015?, General Electric? (GE) had a book value of equity of $98

December 2015?, General Electric? (GE) had a book value of equity of $98

Finance

December 2015?, General Electric? (GE) had a book value of equity of $98.4 ?billion, 9.2 billion shares? outstanding, and a market price of $32.92 per share. GE also had cash of $101.9 ?billion, and total debt of $196.5 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?

 

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a) Computation of GE's market capitalization:-

Market capitalization = Number of shares outstanding * Market price per share 

= 9.2 * $32.92

= $302.86 billion Or $302.9 billion

 

Computation of the GE's market-to-book-ratio:-

Market to book ratio = Market capitalization / Book value of equity 

= $302.86 / $98.4

= 3.08

 

b) Computation of the GE's book debt-equity ratio:-

Book debt-equity ratio = Total debt / Book value of equity 

= $196.5 / $98.4

= 2.00

 

Computation of the GE's market debt-equity ratio:-

Market debt-equity ratio = Total debt / Market capitalization

= $196.5 / $302.86

= 0.65

 

c) Computation of the GE's enterprise value:-

Enterprise value = Market capitalization + Total debt - Cash

= $302.86 + $196.5 - $101.9

= $397.46 billion Or $397.5 billion