FIN 370 Week 4,
FIN 370 Week 4 Learning Team – Company Analysis Part III
For the company that you selected, analyze their capital structure for the past fiscal year. Use Mergent Online in the UOP Library (Business Directories and Financials) to obtain the 10K.
Using the financial statements and the Management Discussion Statement, analyze the amount and character of the firm’s debt and equity.
• What is their debt to equity ratio? How has it changed over the past three years?
• How many tranches of debt does the firm have? What is their cost of debt for each tranche? Calculate the cost of debt (pre-tax and post-tax)?
• What does the firm indicate about their equity? Are they paying dividends to shareholders? Why or why not?
• If you were a shareholder in this firm, what equity return would you expect? Why?
• Using your calculated cost of debt and your expected cost of equity, calculate the firm’s Weighted Average Cost of Capital.
• Provide an analysis of what this means for the entity’s long-term capital plans.
• Provide your recommendations for future years. What adjustments would you make in their capital structure? Why?
• Use the “Notes” feature in PowerPoint to provide the commentary that you would use in your presentation. Be sure that your analysis is rigorous and presents your team’s view of how the company is doing financially.
• Provide references in APA format.