Marginal and Average Tax Rates Download the annual income statements for Sharper Image (SHRP). Looking back at Table 2.3, what is the marginal income tax rate for Sharper Image? Using the total income tax and the pretax income numbers calculate the tax rate for Sharper Image. Is this number greater than 35 percent? Why or why not?

Net Working Capital Find the annual balance sheets for American Electric Power (AEP) and Lands' End (LE). Calculate the net working capital for each company. Is American Electric Power's net working capital negative? If so, does this indicate potential financial difficulty for the company? What about Lands' End?

Per Share Earnings and Dividends Find the annual income statements for Harley Davidson (HDI), Hawaiian Electric Industries (HE) and AOL Time Warner (AOL). What are the earnings per share (EPS Basic from operations) for each of these companies? What are the dividends per share for each company? Why do these companies pay out a different portion of income in the form dividends?

Cash Flow Identity Download the annual balance sheets and income statements for Landry's Seafood Restaurants (LNY). Using the most recent year calculate the cash flow identity for Landry Seafood. Explain your answer.


2.1. Change in Net Working Capital Find the most recent abbreviated balance sheets for General Dynamics at Enter the ticker symbol "GD," follow the "Research" link, and the "Financials" link. Using the two most recent balance sheets, calculate the change in net working capital. What does this number mean?

2.2. Book Values versus Market Values The home page for Coca-Cola Company can be found at Locate the most recent annual report, which contains a balance sheet for the company. What is the book value of equity for Coca-Cola? The market value of a company is the number of shares of stock outstanding times the price per share. This information can be found at using the ticker symbol for Coca-Cola (KO). What is the market value of equity? Which number is more relevant for shareholders?

2.3. Net Working Capital Duke Energy is one of the world's largest energy companies. Go to the company's home page at, follow the link to the investor's page, and locate the annual reports. What was Duke Energy's net working capital for the most recent year? Does this number seem low to you given Duke's current liabilities? Does this indicate that Duke Energy may be experiencing financial problems? Why or why not?

2.4. Cash Flows to Stockholders and Creditors Cooper Tire and Rubber Company provides financial information for investors on its web site at

What's On the Web?

PART ONE Overview of Corporate Finance

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