FIN501 - Strategic Corporate Finance Module 4 - SLP - 9998

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Balance Sheet and Market Value of Your Company\'s Liabilities and Equity

Refer to your company\'s most recent balance sheet. Review the “liabilities and equity side” of the balance sheet.

(a) Short term liabilities (or debt) and long term liabilities

Find out from the balance sheet of the company the total of the short term liabilities (also called \'short term debt\') and long term liabilities (also called \'long term debt\')

(b) Equity

The market value of equity is by definition equal to the number of shares outstanding times the market price per share. Find out the number of shares outstanding and the recent price per share. Then multiply one by the other in order to find the market value of equity of your company. If you have a problem finding out the number of shares outstanding you may go to http://finance.google.com and insert the name of your company. The market value of equity of your company is what is called \'Mkt Cap\' (that is, Market Capitalization) that is market capitalization. An alternative site is http://finance.yahoo.com where again you insert your company\'s name and get the market capitalization.

Once you have this information, prepare a two to three page paper with the following:

1) Compute the debt ratio of your company (total liabilities divided by the total liabilities plus equity) and the debt to equity ratio, (total liabilities divided by total equity). Also, show these two ratios for short-term liabilities only and for long-term liabilities only (instead of total liabilities use just short-term liabilities and long-term liabilities). Show all of your work and calculations.

2) Give your recommendations as to whether or not you consider these ratios to be too small or too large.  Should your SLP company increase its debt or take steps to pay off its debt?

3) Compute the debt to equity ratios to two other companies in the same industry as your SLP company. Which of these three companies has the highest debt to equity ratio, and why do you think it chose to have a relatively high ratio?  Which of these three companies has the lowest debt to equity ratio, and why do you think it chose to have a relatively lower ratio?

4) What do you perceive you have learnt in Module 4 SLP? Please provide your evaluation of the Module 4 SLP in brief.

NOTE: Please note that your report/assignment will not be accepted without proper citations and references. You must use the sources from the background material together with the sources you find your own.

Session Long Project (SLP) Expectations:

In Module 4 SLP, you are expected to:

?Describe the purpose of the paper and conclusion.

?Answer the case assignment questions clearly and provide necessary details and calculations.

?Provide a quality argument; that is, no poor sentence structure, no spelling and grammar mistakes or run-on sentences.

?Provide citations to support your argument and references on a separate page. Please use APA format to provide citations and references [http://owl.english.purdue.edu/owl/resource/560/01/].

?Answer all the SLP questions in an essay format instead of point format. Please do not type questions in the paper.

?Type and double space the paper.

? The following criteria will also be used to assess your paper:

>Precision: Does the paper address the question(s) or task(s)?

>Breadth: Is the full breadth of the subject, i.e., all the keys to the assignment, addressed?

>Depth: Does the paper/report address all elements of the topic in sufficient depth? Does it include and apply the background readings and other background resources? Are they included as references?

>Critical thinking: Are the concepts of this module applied accurately, logically, and relevantly?

>Organization: Is the paper organized in a coherent and systematic manner? Are headings included in all papers greater than 2 pages?

>Clarity: Is the writing clear and the concepts articulated properly? Are paraphrasing and synthesis of concepts the primary means of response to the questions, or are thoughts conveyed through excessive use of quotations?

In addition, this paper will be graded with the following criteria in mind:

A. Provide a direct answer to all three assignment questions, focus only on these three questions.

B. Reference all of your sources of information, both within the text as well as with a bibliography at the end.

C. For all calculations, show all of your work and demonstrate that you understand the steps.

Solution Description

Balance Sheet and Market Value of Your Company\'s Liabilities and Equity

Refer to your company\'s most recent balance sheet. Review the “liabilities and equity side” of the balance sheet.

(a) Short term liabilities (or debt) and long term liabilities

Find out from the balance sheet of the company the total of the short term liabilities (also called \'short term debt\') and long term liabilities (also called \'long term debt\')

(b) Equity

The market value of equity is by definition equal to the number of shares outstanding times the market price per share. Find out the number of shares outstanding and the recent price per share. Then multiply one by the other in order to find the market value of equity of your company. If you have a problem finding out the number of shares outstanding you may go to http://finance.google.com and insert the name of your company. The market value of equity of your company is what is called \'Mkt Cap\' (that is, Market Capitalization) that is market capitalization. An altern

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