SP Problem

STANDARD SPOOR'S

17.1 Capital Structure Go to yahoo.marketguide.com and enter the ticker symbol AMGM for Amgen, a biotechnology company. Follow the "Ratio Comparison" link and find long-term debt-to-equity and total debt-to-equity ratios. How does Amgen compare to the industry, sector, and S&P 500 in these areas? Now answer the same question for Edison International (EIX), the parent company of Southern California Edison, a utility company. How do the capital structures of Amgen and Edison International compare? Can you think of possible explanations for the difference between these two companies?

17.2 Capital Structure Go to www.amex.com and follow the "Screening" link. Using the debt-to-equity screener, how many companies have debt-to-equity ratios greater than 2? Greater than 5? Greater than 10? What company has the highest debt-to-equity ratio? What is the ratio? Now find how many companies have a negative debt-to-equity ratio. What is the lowest debt-to-equity ratio? What does it mean if a company has a negative debt-to-equity ratio?

17.3 Capital Structure Go to www.amex.com and follow the "Screening" link. Using the total assets-to-equity ratio, how many companies have a total asset-to-equity ratio greater than 5? Greater than 10? Greater than 20? What does a high total asset-to-equity ratio imply for the debt-to-equity ratio? How many companies have a total asset-to-equity ratio that is negative? What company has the lowest total asset-to-equity ratio? What does a negative total asset-to-equity ratio imply for the debt-to-equity ratio?

What's On the Web?

Ross et al.: Fundamentals of Corporate Finance, Sixth Edition, Alternate Edition

VI. Cost of Capital and Long-Term Financial Policy

17. Financial Leverage and Capital Structure Policy

© The McGraw-Hill Companies, 2002

PART SIX Cost of Capital and Long-Term Financial Policy

17.4 Bankruptcies Go to www.abiworld.org and follow the "Bankruptcy Headlines" link. How many companies filed for bankruptcy on this day?

Spreadsheet Templates 17-6, 17-12

Ross et al.: Fundamentals I VI. Cost of Capital and I 18. Dividends and Dividend I I © The McGraw-Hill of Corporate Finance, Sixth Long-Term Financial Policy Companies, 2002

Edition, Alternate Edition Policy

Ross et al.: Fundamentals I VI. Cost of Capital and I 18. Dividends and Dividend I I © The McGraw-Hill of Corporate Finance, Sixth Long-Term Financial Policy Companies, 2002

Edition, Alternate Edition Policy

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