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In december 2015​, general electric​ (ge) had a book value of equity of $ 97.1 ​billion, 9.7 billion shares​ outstanding, and a market price of $ 29.84 per share. ge also had cash of $ 101.7 ​billion, and total debt of $ 198.2 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?

Respuesta :

Explanation:

The computation is presented below:

a Market capitalization

= Number of shares outstanding × market price per share

= 9.7 billion shares × $29.84 per share

= $289.448 billion

Market to book ratio is

Market to book ratio = (Market price per share) ÷ (book value per share)

= $289.448  ÷ $97.1

= 2.98

b. The book debt-equity ratio is

= Debt ÷ book equity

= $198.2 ÷ 97.1

= 2.04

The market​ debt-equity ratio

= Debt ÷  market equity

= $198.2 ÷ 289.448

= 0.68

c. The enterprise value equals to

= Market capitalization + Total debt - cash

= $289.448 + $198.2 - $101.7

= $385.948 billion