Question

In December 2018​, General Electric​ (GE) had a book value of equity of $52.5 ​billion, 8.9 billion shares​ outstanding, and a market price of $8.05 per share. GE also had cash of $69.4 billion, and total debt of $108.5 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?

Answer 1

a). - GE's Market​ Capitalization = Market price per share*No of shares Outstanding

= $8.05 per share*8.9 billion shares

GE's Market​ Capitalization = $71.645 billion

- Market-to-Book Ratio = Market​ Capitalization/Total Book Value of Equity

GE's Market-to-Book Ratio = $71.645 billion/$52.5 billion

GE's Market-to-Book Ratio = 1.3647 times

b). - Book Debt-to-Equity ratio = Total Debt/Total Book Value of Equity

= $108.5 billion/$52.5 billion

GE's Book Debt-to-Equity ratio = 2.067 times

- Market Debt-to-Equity ratio = Total Debt/Market Capitalization

= $108.5 billion/$71.645billion

GE's Market Debt-to-Equity ratio = 1.514 times

c). Enterprise value = Market Capitalization + Total Debt - cash & cash Equivalent

Enterprise value = $71.645 billion + $108.5 billion - $69.4 billion

Enterprise value = $110.745 billion

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