John Deere & Company MINICASE ASSIGNMENT
FIN-516 – WEEK 2 – MINI – CASE ASSIGNMENT (This should be posted in Document Sharing)
Select a major industrial or commercial company based in the United States, and listed on one of the major stock exchanges in the United States. Each student should select a different company. Avoid selecting an insurance company or a bank, as the financial ratios for these financial businesses are different. Write a 7 – 8 page double spaced paper answering and demonstrating with calculations and financial data the following questions:
- What is the name of the company? What is the industry sector?
- What are the operating risks of the company?
- What is the financial risk of the company (the debt to total capitalization ratio)?
- Does the company have any preferred stock?
- What is the capital structure of the company?: Short term portion of Long Term Debt, Long Term Debt, Preferred Stock (if any), and market value of Common Stock issued and outstanding?
- What is the company’s current actual Beta?
- What would the Beta of this company be if it had no Long Term Debt in its capital structure? (Apply the Hamada Formula.)
- What is the company’s current Marginal Tax Rate?
- What is the Cost of Debt, before and after taxes?
- What is the Cost of Preferred Stock (if any)?
- What is the Cost of Equity?
- What is the cash dividend yield on the Common Stock?
- What is the Weighted Average Cost of Capital of the company?
- What is the Price Earnings Multiple of the company?
- How has the company’s stock been performing in the last 5 years?
- How would you assess the overall risk structure of the company in terms of its Operating Risks and Financial Risk (Debt to Capitalization Ratio)?
- Would you invest in this company? Why? Or Why not?
- The last page of your paper should be a Bibliography of the sources you used to prepare this paper.
FIN-516 Week 2 – MINI – CASE ASSIGNMENT
John Deere & Company (NYSE:DE)