on march 2005, general electric(GE) had a book value of equity of 113 billion, 1

ID: 2663294 • Letter: O

Question

on march 2005, general electric(GE) had a book value of equity of 113 billion, 10.6 billion shares outstanding, and a market price of $36 per share. GE also had cash of 13 billion and totall debt of 370 billion. Four years later, in early 2009, GE had a book value of equity of 105 billion, 10.5 billion shares outstandin with a market price of $10.80 per share, cash of $48 billion and total debt of $524 billion. over this period, what was the change in GE's

1. market capitalization
2. market to book ration
3. book debt equity ratio
4. market debt equity ration
5. enterprise value

Explanation / Answer

Market capitalization

10.6 *$36

= 381.6

10.5*$10.80

=113.4

(381.6 -113.6)/381.6

= -70.28%

381.6/113

=3.38

113.4/105

=1.08

(3.38 -1.08)/3.38

= - 68.05%

370/113

=3.27

524/105

(5-3.27)/3.27

= 52.90%

370/381.6

=.97

524/113.4

=4.63

(4.63-.97)/.97

=377.31%

381.6+370-13

=738.6

113.4+524-48

=589.4

(738.6-589.4)/738.6

= -20.20 %

Ratio Formulae 2005 (billions) 2009(billions) % change