James_Holliday_Week6Project - liabilities and stockholders...

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James Holliday 10/10/10 Project 2 A) Return on Assets: 58,333 / (1,228,313+176,413) = 4% Return on Stockholders’ Equity: 58,333 / 176,413 = 33% Debt to Assets Ratio: 1,228,313 / 1,404,726 = 87% B) Sepracor’s debt level is higher than the industry which makes it a risky investment. The return on assets and return on stockholders’ equity are above the industry average. C) The debt and equity of a convertible bond are recorded separately as
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Unformatted text preview: liabilities and stockholders equity. Return on Assets 58,333 / (1,078,313+326,413) =4% Return on Stockholders Equity 58,333 / 326,413 =18% Debt to Assets Ratio 1,078,313 / 1,404,726 =77% Return on assets stay the same but return on stockholders equity and debt is lower. With debt more close to industry average, Sepracor may not be as risky as earlier thought....
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This note was uploaded on 05/01/2011 for the course FINANCE 516 taught by Professor Anderson during the Spring '11 term at Keller Graduate School of Management.

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