Discuss and analyze Pfizer Inc. and its direct competitor. According to the photocopy, you need to demonstrate the data for the WACC including the weights and costs of each component. Then you use all of the information gathered to make a comparison of the capital structure, cost components, and WACC. In terms of capital structure (debt, preferred, equity) and corresponding costs associated with each, what factors are attributing to the differences (not just numerical data)? Your analysis should include topics regarding financial ratio analysis which includes quantitative and qualitative data. You would discuss things such as the financial implications of holding too much debt as well as any other concepts that you believe are relevant.

The Company Profile Merck & Co. Inc., cost of capital calculations Financial Statements Dec 31, 2019 Common-Size Financial Statements Capital (fair value) Weights Cost of capital 202,749 202,749 = 232,553 = 0.87 0.87 x 7.66% = 6.68% d long-term debt, including 28,800 Financial Ratios 28,800 = 232,553 = 0.12 0.12 x 3.23% x (1 21.00%) = 0.32% ability4 1,004 1,004 = 232,553 = 0.00 0.00 * 3.20% * (1 21.00%) = 0.01% Relative Valuation 232,553 1.00 7.01% Discounted Cash Flow (DCF) > Based on: 10-K (filing date: 2020-02-26). 1 US$ in millions Economic Value Added (EVA) 2 Equity. See details Economic Value Added (EVA) 3 Loans payable and long-term debt, including current portion. See details Return on Capital (ROC) 4 Operating lease liability. See details 71 Market Value Added (MVA) Dec 31, 2018 SA Long-term Trends 10 un The Company Profile Pfizer Inc., cost of capital calculations Financial Statements Dec 31, 2019 Common-Size Financial Statements Capital (fair value) Weights Cost of capital 189,174 189,174 247,552 = 0.76 0.76 x 8.80% = 6.72% o par value, at stated value 17 17 247,552 0.00 0.00 X 6.25% = 0.00% Financial Ratios 57,037 57,037 247,552 = 0.23 0.23 * 3.23% * (1 - 21.00%) = 0.59% Relative Valuation ability4 1,324 1,324 = 247,552 = 0.01 0.01 x 3.50% x (1 21.00%) = 0.01% 247,552 1.00 7.33% Discounted Cash Flow (DCF) > Based on: 10-K (filing date: 2020-02-27). Economic Value Added (EVA) 1 US$ in millions Economic Value Added (EVA) 2 Equity. See details Alt + A) 3 Debt. See details >> Return on Capital (ROC) > Market Value Added (MVA) SA 10 Long-term Trends Dec 31, 2018 11 2.07 The Company Profile Merck & Co. Inc., cost of capital calculations Financial Statements Dec 31, 2019 Common-Size Financial Statements Capital (fair value) Weights Cost of capital 202,749 202,749 = 232,553 = 0.87 0.87 x 7.66% = 6.68% d long-term debt, including 28,800 Financial Ratios 28,800 = 232,553 = 0.12 0.12 x 3.23% x (1 21.00%) = 0.32% ability4 1,004 1,004 = 232,553 = 0.00 0.00 * 3.20% * (1 21.00%) = 0.01% Relative Valuation 232,553 1.00 7.01% Discounted Cash Flow (DCF) > Based on: 10-K (filing date: 2020-02-26). 1 US$ in millions Economic Value Added (EVA) 2 Equity. See details Economic Value Added (EVA) 3 Loans payable and long-term debt, including current portion. See details Return on Capital (ROC) 4 Operating lease liability. See details 71 Market Value Added (MVA) Dec 31, 2018 SA Long-term Trends 10 un The Company Profile Pfizer Inc., cost of capital calculations Financial Statements Dec 31, 2019 Common-Size Financial Statements Capital (fair value) Weights Cost of capital 189,174 189,174 247,552 = 0.76 0.76 x 8.80% = 6.72% o par value, at stated value 17 17 247,552 0.00 0.00 X 6.25% = 0.00% Financial Ratios 57,037 57,037 247,552 = 0.23 0.23 * 3.23% * (1 - 21.00%) = 0.59% Relative Valuation ability4 1,324 1,324 = 247,552 = 0.01 0.01 x 3.50% x (1 21.00%) = 0.01% 247,552 1.00 7.33% Discounted Cash Flow (DCF) > Based on: 10-K (filing date: 2020-02-27). Economic Value Added (EVA) 1 US$ in millions Economic Value Added (EVA) 2 Equity. See details Alt + A) 3 Debt. See details >> Return on Capital (ROC) > Market Value Added (MVA) SA 10 Long-term Trends Dec 31, 2018 11 2.07