Some balance sheet information is shown here (all values nmillions of dollars). see at the end

questions:

a. What change in the book value of thecompany's equity took place at the end of 2015 ?

b. Is the company's market-to-book ratiomeaningful? Is its book debt-equity ratio meaningful? Explain.

c. Find the company's other financialstatements from that time online. What was the cause of the changeto its book value of equity at the end of 2015 ?

d. Does the company's book value of equity in2016 imply that it is unprofitable? Explain.

Solution .... EXPLAIN HOW TO CALCULATE A .. how did theycome up with $2.104

a. What change in the book value of thecompany's equity took place at the end of 2015 ?

The book value of equity decreased by $2.104billion from the end of the previous year, and was negative

b. Is the company's market-to-book ratiomeaningful? Is its book debt-equity ratio meaningful? Explain.(Select all the choices that apply.)

A. Because the book value of equity is negative in this case,the company's market-to-book ratio and its book debt-equity ratioare not meaningful.

C. Because the book value of equity is negative in this case,the company's market debt-equity ratio may be used incomparison.

c. Find the company's other financialstatements from that time online. What was the cause of the changeto its book value of equity at the end of 2015 ?

Information from the statement of cash flows helped explain thatthe decrease of book value of equity resulted from an increase indebt that was used to repurchase$2.104 billion worth of the firm'sshares.Your answer is correct.d. Does thecompany's book value of equity in 2016 imply that it isunprofitable? Explain. (Select all the choices that apply.)

C.Negative book value of equity does not necessarily mean thefirm is unprofitable.

Your answer is correct.

D.If a firm borrows to repurchase shares or invest in intangibleassets (such as R&D), it can have a negative book value ofequity.

Balance Sheet: 3/31/2016 12/31/2015 9/30/2015 6/30/2015 Assets Current Assets Cash and cash equivalents 293 300 255 232 Net receivables 401 362 385 460 Inventory 374 342 437 306 Other current assets 60 43 53 45 Total Current Assets 1,128 1,047 1,130 1,043 Long-term investments 128 97 — 200 Property, plant, and equipment 979 991 995 1,052 Goodwill 744 748 736 742 Other assets 777 832832 919919 797 Total Assets 3,756 3,715 3,780 3,834 Liabilities Current Liabilities Accounts payable 876 1,467 922 980 Short/current long-term debt 410 2 173 288 Other current liabilities — — — — Total Current Liabilities 1,286 1,469 1,095 1,268 Long-term debt 2,381 2,124 474 475 Other liabilities 435 574 559 551 Total Liabilities 4,102 4,167 2,128 2,294 Total Shareholder's Equity ?346 ?452 1,652 1,540 Total Liabilities and Shareholder's Equity 3,756 3,715 3,780 3,834