In early 2012, General Electric (GE) had a book value of equity of $116 billion, 10.6billion shares outstanding, and a market price of $17.00 per share. GE also had cash of $84 billion, and total debt of $410 billion. Three years later, in early 2015, GE had a book value of equity of $128 billion, 10 .0 billion shares outstanding with a market price of $25 per share, cash of $85 billion, and total debt of $302 billion. Over this period, what was the change in GE’s
- a. market capitalization?
- b. market-to-book ratio?
- c. enterprise value?
Want to see the full answer?
Check out a sample textbook solutionChapter 2 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Additional Business Textbook Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Foundations Of Finance
Corporate Finance
Foundations of Finance (9th Edition) (Pearson Series in Finance)
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Contemporary Engineering Economics (6th Edition)
- n 2018, Caterpillar Inc. had about 656 million shares outstanding. Their book value was $31.0 per share, and the market price was $158.80 per share. The company’s balance sheet shows that the company had $16.80 billion of long-term debt, which was currently selling near par value. a. What was Caterpillar’s book debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) b. What was its market debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) c. Which measure should you use to calculate the company’s cost of capital?arrow_forwardIn 2018, Caterpillar Inc. had about 710 million shares outstanding. Their book value was $38.0 per share, and the market price was $85.00 per share. The company's balance sheet shows that the company had $29.50 billion of long-term debt, which was currently selling near par value. a. What was Caterpillar's book debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) b. What was its market debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) c. Which measure should you use to calculate the company's cost of capital? a. Book debt-to-value ratio b. C. Markeet debt-to-value ratio Measurearrow_forwardIn 2018, Caterpillar Inc. had about 730 million shares outstanding. Their book value was $30.0 per share, and the market price was $87.00 per share. The company's balance sheet shows that the company had $30.50 billion of long-term debt, which was currently selling near par value. a. What was Caterpillar's book debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) b. What was its market debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) c. Which measure should you use to calculate the company's cost of capital? а. Book debt-to-value ratio b. Markeet debt-to-value ratio C. Measurearrow_forward
- eBook Edelman Engines has $18 billion in total assets- of which cash and equivalents total $120 million. Its balance sheet shows $2.7 billion in current liabilities of which the notes payable balance totals $1.16 billion. The firm also has $9 billion in long-term debt and $6.3 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $26 per share. The firm's EBITDA totals $1.248 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places. M/B: EV/EBITDA:arrow_forwardIn early 2018, Ford Motor (F) had a book value of equity of $34.9 billion, $3.4 billion shares outstanding, and a market price of $12.58 per share. Ford also had cash of $39.3 billion, and total debt of $153.3 billion. Four years later, in early 2022, Ford had a book value of equity of $48.8 billion, $4.8 billion shares outstanding with a market price of $21.46 per share, cash of $49.4 billion, and total debt of $138.1 billion. Over this period, what was the change in Ford's a. market capitalization? b. market-to-book ratio? c. enterprise value? a. Over the 4-year period, what was the change in Ford's market capitalization? The change in Ford's market capitalization was $ b. Over the 4-year period, what was the change in The change in Ford's market-to-book ratio was billion. (Round to two decimal places.) Ford's market-to-book ratio? (Round to two decimal places.) c. Over the 4-year period, what was the change in Ford's enterprise value? The change in Ford's enterprise value was $…arrow_forwardEdelman Engines has $18 billion in total assets of which cash and equivalents total $80 million. Its balance sheet shows $1.8 billion in current liabilities of which the notes payable balance totals $1.05 billion. The firm also has $9.9 billion in long-term debt and $6.3 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $26 per share. The firm's EBITDA totals $1.17 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios?arrow_forward
- Jensen Inc. has total equity of $70 billion and 670 million shares outstanding. Its ROE is 18.32%. The dividend payout ratio is 11.3%. Calculate the company's dividends per share (round to the nearest penny). The company's dividends per share is $ (Round to the nearest cent.)arrow_forwardIn 2020, Caterpillar Incorporated had about 540 million shares outstanding. Their book value was $39.4 per share, and the market price was $111.70 per share. The company's balance sheet shows that the company had $28.80 billion of long-term debt, which was currently selling near par value. a. What was Caterpillar's book debt-to-value ratio? Note: Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places. b. What was its market debt-to-value ratio? Note: Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places. c. Which measure should you use to calculate the company's cost of capital? a. Book debt-to-value ratio b. Markeet debt-to-value ratio c. Measure Market valuearrow_forwardEdelman Engines has $15 billion in total assets of which cash and equivalents total $120 million. Its balance sheet shows $2.25 billion in current liabilities of which the notes payable balance totals $ 0.97 billion. The firm also has $6.75 billion in long-term debt and $6 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $39 per share. The firm's EBITDA totals $1.872 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places.arrow_forward
- In 2020, Caterpillar Incorporated had about 540 million shares outstanding. Their book value was $25.36 per share, and the market price was $153.70 per share. The company’s balance sheet shows that the company had $26.7 billion of long-term debt, which was currently selling near par value. What was Caterpillar’s book debt-to-value ratio? Note: Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places. What was its market debt-to-value ratio? Note: Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.arrow_forwardEdelman Engines has $20 billion in total assets — of which cash and equivalents total $120 million. Its balance sheet shows $4 billion in current liabilities of which the notes payable balance totals $0.8 billion. The firm also has $10 billion in long-term debt and $6 billion in common equity. It has 500 million shares of common stock outstanding, and its stock price is $23 per share. The firm's EBITDA totals $1.38 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places. M/B: EV/EBITDA: Xarrow_forwardEdelman Engines has $17 billion in total assets —ofwhich cash and equivalents total $100 million. Its balance sheet shows $1.7 billion in currentliabilities—of which the notes payable balance totals $1 billion. The firm also has $10.2 billionin long-term debt and $5.1 billion in common equity. It has 300 million shares of commonstock outstanding, and its stock price is $20 per share. The firm’s EBITDA totals $1.368 billion.Assume the firm’s debt is priced at par, so the market value of its debt equals its book value.What are Edelman’s market/book and its EV/EBITDA ratios?arrow_forward
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education