Consider the capital structure of seven publically traded companies and to compare the various structures with peers so conclusions can be reached.

Calculate the capital structures of several firms and examine the stability of those structures. enter Thomson one for each of the seven companies we have been working with; Sherwin Williams (SHW), General Motors (GM), Harley-Davidson (HOG), Starbucks (SBUX), Microsoft (MSFT), General Mills (GIS), and Yahoo (YHOO), and locate the five-year balance sheet history. Scroll down to the liabilities and equities section and write down the firm’s capital components over the last five years.

Compute the capital structure as of the end of each year.

a. Are the structures relatively stable over time?

b. Might stability reflect a target capital structure or could there be other reasons for it?

c. Which of the firms might be applying the ideas presented in this chapter about managing stock price with leverage? Which companies don’t seem to be paying much attention to that idea?

d. Our firms are from different industries but some may have similar capital structures. What characteristic do those firms share that could explain the similarity.

e. Do any of the firms seem to have too much debt?

f. How could a debt-heavy capital structure come about despite management’s efforts to maintain a more conservative structure?

Also include the following:

1. Compare the stability of the capital structures for the firms listed in the text.

2. Discuss reasons firms have a stable capital structure.

3. Identify firms applying the concepts identified in chapter 14 about managing stock price with leverage.

4. Identify those not concerned with the concept.

5. Discuss the reasons some companies carry little or no debt.

6. Identify companies that seem to carry too much debt and provide possible rationale for doing so.