Question

In December 2015​, General Electric​ (GE) had a book value of equity of $98.3 ​billion, 9.4 billion shares​ outstanding, and a market price of $32.95 per share. GE also had cash of $101.9 ​billion, and total debt of $199.1 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?

a. What was​ GE's market​ capitalization?

​GE's market capitalization was ​$__ billion.  ​(Round to one decimal​ place.)

What was​ GE's market-to-book​ ratio?

​GE's market-to-book ratio was __.​(Round to two decimal​ places.)

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

​GE's book​ debt-equity ratio was __. (Round to two decimal​ places.)

What was​ GE's market​ debt-equity ratio?

​GE's market​ debt-equity ratio was __.​(Round to two decimal​ places.)

c. What was​ GE's enterprise​ value?

​GE's enterprise value was ​$__ billion.  ​(Round to one decimal​ place.)

Answer 1

Given information:

• BV of equity = $98.3 ​billion
• Market price = $32.95
• No. of shares outstanding = 9.4 billion
• Cash = $101.9 ​billion
• Debt = $199.1 billion

1. GE's market​ capitalization
Market Cap = Market Price per share * No. of shares outstanding = $32.95 * 9.4 billion = $309.7 billion
GE's market capitalization was ​$309.7 billion.  ​(Round to one decimal​ place.)

2. What was​ GE's market-to-book​ ratio?
M/B ratio = Market Cap / BV of equity = $309.7 billion / $98.3 ​billion = 3.15
​GE's market-to-book ratio was 3.15. ​(Round to two decimal​ places.)

3. What was​ GE's book​ debt-equity ratio?
Book debt to equity ratio = Debt / BV of equity = $199.1 billion / $98.3 ​billion = 2.03
​GE's book​ debt-equity ratio was 2.03. (Round to two decimal​ places.)

4. What was​ GE's market​ debt-equity ratio?
Market debt to equity ratio = Debt / Market Cap = $199.1 billion / $309.7 billion = 0.64
​GE's market​ debt-equity ratio was 0.64.​ (Round to two decimal​ places.)

5. What was​ GE's enterprise​ value?
EV = Market Cap + Debt - Cash = $309.7 billion + $199.1 billion - $101.9 ​billion = $406.9 billion
​GE's enterprise value was ​$406.9 billion.  ​(Round to one decimal​ place.)