Fi 516 Mini Case

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FIN-516 – WEEK 2 – MINI – CASE ASSIGNMENT 1. What is the name of the company? What is the industry sector?
General Electric Industrial Goods 2. What are the operating risks of the company?

3. What is the financial risk of the company (the LT debt to total capitalization ratio)?
Debt to equity = Total debt ÷ GE shareowners’ equity
= 11,589 ÷ 116,438 = 0.10 4. Does the company have any preferred stock? (shares/book value/market price and value)
GE does not have any preferred stock outstanding that is available to the public. 5. 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?
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What is the Cost of Preferred Stock (if any)? (quote current yield on preferred stock---identifying source and date of source, provide dividend $ and stock price; also compare to dividends paid in last three years on issued and outstanding preferred stock)
General Electric has no outstanding preferred stock 9. What is the Cost of Equity? (provide method/approach of calculating, provide equation, all data inputs and product.) 10. Cost of Equity Calculations:

Using DCF:
Year 2010 2009 2008
Dividend declared per share 0.46 0.61 1.24
Sustainable growth rate 5.48% 3.67% 4.15%
Stock Market Price 18.29 15.13 16.2
Cost of Equity 8.13% 7.85% 12.12% What is the cash dividend yield on the Common Stock? (provide formula, data inputs and product.)

The formula for dividend yield is:

Dividend Yield = Annual Dividend / Current Stock

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