To get more details about the companies’ capital structures over the past five years, select FINANCIALS > FUNDAMENTAL RATIOS > THOMSON RATIOS. From here you can select ANNUAL RATIOS and/or 5 YEAR AVERAGE RATIOS REPORT. In each case, you can scroll down and look for “Leverage Ratios.” Here you will find a variety of leverage ratios for the past 5 years. (Notice that these 2 pages offer different information. The ANNUAL RATIOS page offers year-end leverage ratios, while the 5 YEAR AVERAGE RATIOS REPORT offers the average ratio over the previous 5 years for each calendar date. In other words, the 5 YEAR AVERAGE RATIOS REPORT smooths the changes in capital structure over the reporting period.) Do these ratios suggest that the company has significantly changed its capital structure over the past 5 years? If so, what factors could possibly explain this shift? (Financial statements might be useful to detect any shifts that may have led to the company’s changing capital structure.  You may also consult the company’s annual report to see if there is any discussion and/or explanation for these changes. Both the historical financial statements and annual report information can be found via Thomson One.)

Access the Thomson ONE problems through the ThomsonNOW Web site. Use the Thomson ONE—Business School Edition online database to work this chapter’s questions.

Exploring the Capital Structures for Four of the World’s Leading Auto Companies

This chapter provides an overview of the effects of leverage and describes the process that firms use to determine their optimal capital structure. The chapter also indicates that capital structures tend to vary across industries and across countries. If you are interested in exploring these differences in more detail, Thomson One provides information about the capital structures of each of the companies it follows.

The following discussion questions demonstrate how we can use this information to evaluate the capital structures for four of the world’s leading automobile companies: General Motors (GM), Ford (F), BMW (BMW), and Toyota (J:TYMO). As you gather information on these companies, be mindful of the currencies in which these companies’ financial data are reported.