International Reporting Case Sepracor Inc. 2007 (,000) Current liabilities $ 554,114 Convertible subordinated debt 648,020 Total liabilities 1,228,313 Stockholders' equity 176,413 Net income 58,333 (a) Compute the following ratios: Return on Assets = Net Income / Total
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debt without collateral. In corporate finance, the term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note. A debenture is thus like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company's capital structure, it does not become
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Industries Limited Triple Option Convertible Debentures Submitted By: Group-8: Abhishek Kumar (BLP038) Aparna Chowdhry (BLP040) Maninder Bisen (BLP042) Vivek Kumar (BLP044) Manjesh Bharati (BLP046) Raman Girdhar (BLP048) Question-1: Discuss in detail the benefits of convertible securities for the issuing company as well as the investors. Briefly discuss the potential drawback of convertible securities for both? Ans-1
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Common Stock with warrant Convertible cumulative preferred stock - Cost Around 12.27 Debentures – Cost around 15% Convertible debenture – cost around 10% MCI initially issued equity in 1972 and later it started issuing debentures & convertible debentures. This was because the cost of equity is highest. MCI relied on debentures for a while and then convertible debentures which had lower cost of capital. As its equity stock price continued rising, it converted the convertible debentures to common stock
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Common Stock with warrant Convertible cumulative preferred stock - Cost Around 12.27 Debentures – Cost around 15% Convertible debenture – cost around 10% MCI initially issued equity in 1972 and later it started issuing debentures & convertible debentures. This was because the cost of equity is highest. MCI relied on debentures for a while and then convertible debentures which had lower cost of capital. As its equity stock price continued rising, it converted the convertible debentures to common stock
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structure? 1 What is “Capital Structure”? Definition The capital structure of a firm is the mix of different securities issued by the firm to finance its operations. Securities Bonds, bank loans Ordinary shares (common stock), Preference shares (preferred stock) Hybrids, eg warrants, convertible bonds 2 What is “Capital Structure”? Balance Sheet Current Assets Current Liabilities Debt Preference shares Ordinary shares 3 Fixed Assets Financial Structure What
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value based on their current market performance. Currently, Swan Davis’ capital is comprised of bonds and equity. They have two types of bonds. Bond A is a highly liquid bond last priced at $1092 but has a fair market value of $813 due to the fact that the ratings of Swan Davis’ bonds decreased from A to BB. Bond B is an illiquid bond that was last priced at $850 but again due to the ratings of their bonds and that it is illiquid the fair value is actually $404. Swan Davis has preferred stock and
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Jacque Final Review Guide 1) Operating Leverage vs. financial leverage: Laurence A high degree of Operating Leverage means that a relatively low change in sales will result in large change in EBIT. If all things are held constant, the higher the firm’s fixed cost the greater its Operating Leverage. In Jacque’s words, this has to do with volatility of the top line. Those firms are usually highly automated, capital intensive, hire highly skilled individuals (read pay them huge salaries), and
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Bonds are appealing to investors because they provide a generous amount of current income and they can often generate large capital gains. These two sources of income together can lead to attractive and highly competitive investor returns. Bonds make an attractive investment outlet because of their versatility. They can provide a conservative investor with high current income or they can be used aggressively by investors who prefer capital gains. Given the wide and frequent swings in interest rates
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VALUATION OF BONDS Valuation Value of financial securities = PV of expected future cash flows To value bonds and stocks we need to: Estimate future cash flows: Size (how much) and Timing (when) Discount future cash flows at an appropriate rate: The rate should be appropriate to the risk presented by the security. Indian Debt Market Consists of mainly two categories: the government securities comprising central government and state
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