Use Yahoo finance to access financial statements of two of the following compani
ID: 2790380 • Letter: U
Question
Use Yahoo finance to access financial statements of two of the following companies (your choice) United States Steel (symbol:X), Facebook (FB), Apple (AAPL), Citibank(C) and Walmart(WMT) for 2016 and answer the following questions for companies you have selected:
What is book value of the company?
How many outstanding shares the company has?
What is market value of the company on the last trading day?
What is the leverage ratio (total debt/equity) for the company? (Total debt = short term debt + long term debt)
What is risk free rate? How do you find it?
Use CAPM to calculate the cost of equity for the company, using the Beta provided by Yahoo. Assume market risk premium of 8%. (continued below)
Calculate the WACC for the company, using cost of debt = (interest expense)/(total debt)
What is the payout policy of the company?
What were the financing and investing activities of the company in 2016: capital expenditures, issuing stocks or borrowings, total dividend payout?
Explanation / Answer
What is book value of the company? FACEBOOK(FB) WALMART(WMT) Book Value = Total Assets/ Total Liabilities Book Value = Total Assets/ Total Liabilities = 64,961,000-5,767,000 = 198,825,000-121,027,000 5,91,94,000 7,77,98,000 How many outstanding shares the company has? FACEBOOK(FB) WALMART(WMT) 2.38B 2.99B What is market value of the company on the last trading day? FACEBOOK(FB) WALMART(WMT) MV Outstanding Shares* Stock Price MV Outstanding Shares* Stock Price 2.38B*180.52 2.99B*96.41 429.64 B 288.27 B What is the leverage ratio (total debt/equity) for the company? (Total debt = short term debt + long term debt) FACEBOOK(FB) WALMART(WMT) Total Debt Short Term Debt + Long Term Debt 2,80,000 Total Debt Short Term Debt + Long Term Debt 3,920,000+42,018,000 Equity 5,91,94,000 Equity 4,59,38,000 Leverage Ratio Total Debt/Equity 2,80,000/5,91,94000 Leverage Ratio Total Debt/Equity 45,938,000/77,798,000 0% 59% What is risk free rate? How do you find it? Risk Free Rates are most of the times considered with US treasury rates. One can find those in Yahoo finance Bond Center. Below is the table: Maturity Yield Yesterday Last Week Last Month 3 Month 1.22 1.22 1.17 1.05 6 Month 1.37 1.36 1.31 1.21 2 Year 1.72 1.74 1.66 1.55
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