Cost of Capital and Risk in Corporate Finance-Part 2 Only

Key Assignment

Part I

Choose a public company, and present findings from your financial analysis in a report. Your report must include the following:

• Give a description of the operating profit margin.
• Give a description of the asset turnover.
• Give a description of the equity multiplier.
• Give a description of the return on equity.
• Give a description of the return on assets.
• Calculate the operating profit margin. Explain your answer.
• Calculate the asset turnover. Explain your answer.
• Calculate the equity multiplier. Explain your answer.
• Calculate the return on assets. Explain your answer.
• Calculate the return on equity. Explain your answer.
• What does the DuPont analysis describe about the company chosen?
• Which ratio demonstrates the company’s weakest area? Explain your answer.

Part II

Using the same company from Part I, write a report of 800–1,000 words that demonstrates your understanding of the cost of capital and risk. Specifically, you are to include the following:

• Give a description of the weighted average cost of capital.
• Give a description of the capital asset pricing model.
• Give a description of the security market line.
• Give a description of the cost of debt.
• Calculate the weighted average cost of capital. Explain your answer.
• Calculate the cost of debt. Explain your answer.
• How would you restructure the firm’s debt? Explain your answer.

*PLEASE NOTE PART 1 HAS BEEN COMPLETED*