Bankruptcy: Vodafone and Samsung

The company’s leverage ratio is 28% - 72% of its assets are financed by common equity and the company was profitable in the last reporting period. The company should easily raise additional funds from creditors and a convertible debenture will be an appealing venture for creditors who would want to purchase stocks of the company in the future.

A reason for this slight decline could be that there has been an increase in their short-term debt. In this case their current liabilities did actually increase.

This is no surprise due to the major expansion that CC took on in 2001. Lastly, the long term debt to capitalization ratio slowly decreases which is just showing how CC is not being risky with their capital through debt.

You would not buy a home, car or other large purchases without researching what product offered you the most for your money. The same is true when investing in a company. Investors do avid research on multiple companies to find what company matches the investors' criteria. In this paper Team C will research both AT&T and Verizon's financial documents. Team C will compare selected ratios, cash flow and make recommendations how both companies can manage cash flow for the future.

Debt ratio percentages increased for Company G from 28.34% to 29.94%. Industry quartile is 30, 45 and 66 percent, putting Company G below average. Debt Ratio represents strength for Company G.

A more tell tale sign is the quick ratio, or acid test, which has increased year after year. Debt to total assets has decreased over 5% since 2001, indicating less financing of current and long term debt and more company assets. Their cash debt coverage far surpasses the ideal 20%, indicating a high level of solvency with sufficient funds and assets to satisfy all debtors. Asset turnover has more or less maintained at right around 1.6, signifying a turnover rate of just less than 180 times per year.

When compared with the industry, the debt/equity ratio of S&S Air of 0.82 is just over the industry lower quartile of 0.79. Again, this indicates that S&S Air has less debt than the industry average of 1.08.

* Current ratio of 3.53 shows that Adidaz is in a healthy situation and has the ability to pay off future debt. (Increase of 0.45).

After reviewing Telus’ liquidity ratios its clear from their current ratio that they will be able to meet their short term obligations which is a major key in moving forward as they have just acquired a lot of debt from capital expenditures. However, there is some room for concern as their cash ratio is very low at 0.009 which hints that the company is having some cashflow problems, if the problem is not dealt with major problems can arise from this. Also their financial leverage ratio is higher than all their competitors indicating that they have the most debt out of all of the companies, with cashflow problems and the amount of debt they have just borrowed this raises more concerns if Telus would be able to repay its debt. In addition, their capital investments to upgrade its network infrastructure to remain competitive Telus also had high debt to EBITDA ratio of 3.4 over its competitors by almost 2.0 shows red flags that default warnings may be a concern in the coming future. In comparison to other companies in the industry, Telus’ ROE is 6.5% which is significantly

While analyzing AT& T a few differences are noted. As with Verizon, the current ratio did improve with an increase of five percent from 58% in 2005 to 63% in 2006. However, even though debt to equity decreased for both companies AT & T's decrease was only 4% compared to Verizon's significant decrease of 23%. The net profit margin ratio did opposite changes between the two companies while Verizon's increase not even one full percent AT &T's decreased by almost 3%. Even with these significant changes AT & T's price to earnings, as of 2006, was at 20.89 (www.hoovers.com). These variances tell us a couple of things. First, that AT& T has taken on more debt in 2006 versus 2005, but along with that debt they have been able to increase their net profit margin, helping the company in the way of earnings. The strong price to earnings ratio of 20.89 also shows that the shareholders are not faring too poorly either.

The debt-to-capital ratio gives users an idea of a company's financial structure, or how it is financing its operations, along with some insight into its financial strength. The higher the debt-to-capital ratio, the more debt the company has compared to its equity. Star River has always depended much on debt for its financing and the trend shows this ratio may get higher in future. Star River, with high debt-to-capital ratios, compared to a general or industry average, may show weak financial strength because the cost of these debts may weigh on the company and

In terms of financial flexibility, a relatively high interest coverage ratio (ICR) of 36.8 supports the company’s ability to Flexibility take on more debt. Especially by comparing the ratio with its peers, such ratio seems to match with its risk aversion philosophy. Agency Cost of Debt

The market risk premium of 5.5% and the risk free rate of 4.62% (30-year U.S. Treasury) were given in the case. The beta and the pre-tax cost of debt are based on our averaged comparative company analysis. Using the averaged beta of 1.05, the pretax cost of debt of 5.79%, (based on bond ratings) and the weighted average of debt & equity, the telecommunications segmented hurdle rate is calculated at 8.64% (see Exhibit 2).

The long-term liquidity risk ratio such as LT debt/Equity, D/E, and Total Liabilities to Total Assets all show a decline from year 2005 due to the repayment of debts. The interest coverage ratio also shows a healthy number of 29.45 in comparison to the industrial average of 15.04 indicating a high ability to pay out its interest expense. Such a low relative risk is not surprising due to the nature of its business depending heavily in R&D development and large intangible assets.

From Exhibits 7 & 8, quick and current ratios grew steadily over the years reflecting ability for KKD to repay their short-term debt. These ratios when compared to their competitors were above the average. The leverage ratios were lower than most of the other companies showing that KKD did not have enough invested in long term debt.