This week, we will cover the right side of the accounting equation (A = L + E), Liabilities (long-term) and Equity. This is referred to as a company’s capital structure – the combination of debt (Liabilities) and equity that a company uses to finance its operations and growth. Debt comes in the form of bonds (our topic for chapter 10) or loans, and equity may come from common stock, preferred stock or retained earnings (our topic for chapter 11).
For this discussion post, you will research and analyze a company’s debt and equity section.
Last week, you picked two companies and researched Total Assets and PP&E amounts. For this assignment, select ONE of your companies from last week. Using the most recent financial statement data, submit the following on your post:
List the Name of company you selected and the financial statement year:
- Total current liabilites, non current (long term) liabilites, and Total Liabilites
- Total Stockholders Equity (Note, the sum of Total Liabilites and Total Stockholders Equity should equal the amount of Total Assets you reported for this company in last week’s assignment).
- Compute the Debt to Equity ratio (Total liabilities / Total Stockholders’ Equity)
- Breifly define financial leverage. Do you think your company is highly leveraged?
- Define Preferred Stock and Treasury Stock. Looking at your company’s equity section, does your company have either of these?
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