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Week 1 Lecture Notes[1]

Week 1 Lecture Notes[1] - A Helpful hint An OAES Template...

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A) Helpful hint: An OAES Template in Excel format is provided in the Doc Sharing area of the classroom as an aid to help you work through these problems. B) 1. Determine the requested information for FedEx (stock symbol FDX): Using the 2007 "FedEx Annual Report to the Shareholders" PDF, locate the Consolidated Statements of Income and Consolidated Balance Sheets on pages 59–60 in the document. Locate financial information for FedEx on the finance pages of http://finance.yahoo.com/ ( http://finance.yahoo.com/q?s=FDX ), specifically the historical stock prices on December 13, 2006 (stock purchase date) and on August 13, 2007 (TSR evaluation date). In addition, using the same historical tables, determine if FedEx paid any dividends to shareholders during the same date range (December 13, 2006 - August 13, 2007). Use this stock price and dividend information to calculate the TSR (see Chapter 2 of your text). The return should be based on a 12-month year. Using the total market capitalization listed in the Key Statistics area located to the left of your screen under "Company" (assume $29 billion), and the capital investment by debt and equity as of May 31, 2007 (see financial statements listed in part 1 above), calculate the MVA. Be careful and read/interpret the MVA formula in the chapter of your course text. Explain how the TSR and MVA compare with the SVA and the EVA. How does this affect stakeholders in a company? C) 2. Determine the requested information for FedEx: Define cost, profit, and investment centers. Review the "FedEx Annual Report to the Shareholders," pages 32–53. Identify one of the areas from the management’s discussion and analysis that could be classified as a cost, profit, or investment center and explain your reasons for this selection.
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Week 1 Lecture Notes 1) If a problem asks you to annualize a number, you must convert that number into a 12 month return. For example, if you hold an investment for
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