Analysis of capitalization, Financial Management

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You must analyze how the company is financed through equity and debt financing. You will discuss the level of leverage and how it compares to similar companies in the Industry.

• You will use ratio analysis and primarily the Capital Structure ratios. You will use a graph for each ratio to present the projected trends and provide intelligent discussion of what you observe. Stating they are going up or down and "this could be a problem" is not adequate. You should determine if the change(s) in the trend is significant and, if so, what could this mean? You should reference specific changes on the Balance Sheet, Income Statement and Cash Flow Statement to support your discussion. You can also use other details provide in the company's 10-K and Annual Report.

• After you have completed each ratio analysis ask yourself, "does this say anything important that is not obvious to the casual observer?" Always keep in mind that this is going to be used to make an important investment decision and should be at a high, informative level.

• Each ratio should have it's own graph and one benchmark ratio. Use the following ratios as a minimum:

a. Long-term Debt to Total Capitalization

b. Time Interest Earned

c. Total Debt to Total Assets


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