Debt vs Equity Instruments

2457 Words Apr 26th, 2007 10 Pages
Characteristics of Debt and Equity Instruments

Team D: Steven Harrison, Jessica Jefferies, Arlene Rivera, Kairstin Roberts,

FIN476

Mr. Seth Fargen

January 29, 2007

Financial Instruments
Financial Instruments are the lifeblood of any successful company; they are like rivers of living water that brings life and nourishment in order to grow into a strong company. Financial Instruments fall into two categories, debt and equity. Debt is a financial instrument that is used to finance an organization by paying back borrowed capital with interest. Debt instruments are notes, loans, bonds, and debentures are used to pay for needs for an entity preferably in the short term. An advantage of good debt is the predictability of payments to
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In recent news, Pfizer is suffering from major loss and no upcoming drugs in their pipeline; which was in the past a major focus on their development. With many of their blockbuster drugs approaching the end of their patents and increasing competition from generic companies, Pfizer has replaced their current CEO Hank McKinnell with Jeffrey Kindler who is a corporate lawyer and assigned him the task of financially turning this company around.
Pfizer has used the proper equity structure to finance their company. Pfizer's debt/equity ratio is .12 which is far below S&P 500 average of 1.07.

Balance Sheet Pfizer Inc. (PFE)

View: Annual Data | Quarterly Data
All numbers in thousands
PERIOD ENDING 1-Oct-06 2-Jul-06 2-Apr-06 31-Dec-05

Assets
Current Assets Cash And Cash Equivalents 1,177,000 1,921,000 2,869,000 2,247,000 Short Term Investments 12,114,000 13,340,000 13,078,000 20,489,000 Net Receivables 9,177,000 9,275,000 10,352,000 9,765,000 Inventory 6,167,000 6,392,000 6,814,000 6,199,000 Other Current Assets 10,086,000 10,066,000 4,302,000 3,196,000

Total Current Assets 38,721,000 40,994,000 37,415,000 41,896,000
Long Term Investments 2,845,000 2,387,000 2,543,000 2,497,000
Property Plant and Equipment