Business Administration - Management FIS403 Lecture Notes - Lecture 3: Accrual, Dividend Yield
Magna Debt Utilization
2011 2012 2013 2014
2015
Debt/Equity 0.01 0.01 0.01 0.09 0.26
Times Interest — 52.5 — 55 46.7
Debt Utilization
Use the following information to answer the questions below.
Year 1 Year 2 Year 3 Year 4 Year 5
Debt/Equity 35% 33% 27% 45% 42%
Times Interest 3.22x 3.31x 3.52x 3.30x
3.45x
1. Assess the debt protection offered by the company.
2.Determine the impact on a company’s debt ratios in each of the
following scenarios.
a) The economy is in recession and net income declines.
b) The company completes a large equity issue.
Valuation Ratios
From Chapter 2
Purpose:
Assess what the company is worth to an investor
Earnings per share
Payout ratio
P/E ratio
Dividend yield
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