Calculate long-term debt assets

Reference no: EM132368664

Corporate Finance Assignment -

Part A - Each member of the group (group size is 4) should

(a) Calculate long-term debt/total assets and long-term debt/equity ratios over the last five years for the company allocated to you.

(b) Compare your firm's long-term debt/total assets and long-term debt/equity ratios with your firm's industry average and discuss the findings.

(c) Identify a matching firm in your firm's industry with similar size as your firm (use 2018 total assets to choose a matching firm). Compare your firm's long-term debt/total assets and long-term debt/equity ratio with your matching firm and discuss the findings.

(d) Briefly discuss the term "Optimal Capital Structure". Does your company have an optimal debt/equity ratio? Use calculations on business risk in your analysis. Justify your answer.

(e) Identify one dividend change (interim or final) announcement (note: compare interim to interim to identify changes in interim dividend or final to final to identify changes in final dividend using "dividend history from the DatAnalysis Premium Database" for the company allocated to you. Identify interim announcement date from half yearly report. Identify final announcement date from preliminary final report.

(i) Calculate the three-day return earned by your firm for the period from the day before the announcement day to the day after the announcement date; and the two-day return earned by your firm for the period from the day of the announcement to the day after the announcement date

(ii) Calculate the market return for the corresponding periods in (i).

(iii) Calculate the excess return: (i) - (ii)

Part B - Group Work

(a) Compare and discuss the findings of your group members in regards to "Optimal Capital Structure". In your discussion, explain why and how they vary among firms allocated to your group.

(b) Compare and discuss the relevant theory for the findings of the market reaction to dividend changes in (e) of Part A. In your discussion, include signalling hypothesis, free cash flow hypothesis, and the clientele hypothesis.

Attachment:- Corporate Finance Assignment Files.rar

Reference no: EM132368664

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