Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need the help with question 7 and since you answered the first part I hope you can help me thanks Company Basics and Financial

I need the help with question 7 and since you answered the first part I hope you can help me thanks

Company Basics and Financial Ratios Part 2 Question 1 Using the most recent three years of available data, compute Wal-Marts and Targets degree of operating leverage. You will have to use the formula, percentage change in pretax income divided by percentage change in revenues. Show your work. Question 2 Using the last three years of available data, compute Wal-Marts and Targets degree of financial leverage. You will have to use the formula, percentage change in net income divided by percentage change in pretax income (EBIT). Show your work. Question 3 With each company, multiply the degree of financial leverage times the degree of operating leverage to determine the degree of combined leverage for the two periods. Question 4 Compare the leverage ratios. Did the degrees of leverage stay the same? Explain the differences between the two periods. Wal-Mart Target Question 5 Go to finance.yahoo.com and get the quotes of Target and Wal-Mart. (Type into the Get Quotes box. Click on the Profile section on the home page and write a few sentences of each firms activities. Write down each firms P/E ratio. Calculate the PEG ratio (the P/E ratio divided by annual growth). a.) Which firms ratios are higher? b.) Is the stock of each company up or down from the prior day? (See change on the home page.) c.) What is each companys 52-week range? d.) Scroll down and click on Analysts Opinion. What is the Mean Target, the High Target, and the Low Target? How many brokers follow each firm? Wal-Mart Target Question 6 a.)With each company, compute the $ change in Total Assets over the last two years. b.) Do the same computation for Stockholders Equity. c.) Do the same computation for Long-Term Debt. d.) In a brief paragraph describe the changes in total assets, stockholders equity and long-term obligations. Do these changes appear to affect the firm? Describe. Wal-Mart Target Question 7 Find the long-term debt and total common equity for the last 2 years. Add the two together to get total capital. a.) Calculate the weights between long term debt and equity that you would use in a weighted average cost of capital calculation. b.) What are the weights for long term debt and equity for the last five years? Have they remained stable? Comment on the stability or lack of stability and how it would affect the companys cost of capital Wal-Mart Target

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

MATLAB An Introduction With Applications

Authors: Amos Gilat

6th Edition

111938513X, 978-1119385134

More Books

Students also viewed these Finance questions