Ameritrade Case solution

Ameritrade Case solution - 201-046Cost of Capital at

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Unformatted text preview: 201-046Cost of Capital at Ameritrade199719961995Net RevenuesTransaction Income$51,936,902.00$36,469,561.00$23,977,481.00Net Interest18,193,94611,477,8788,434,584Other7,107,4926,391,3142,607,538Total Net Revenues77,238,34054,338,75335,019,603Expenses Excluding InterestEmployee Compensation19,290,80814,049,6428,481,977Commissions and Clearance3,320,2622,530,6422,516,796Communications5,623,4683,685,5352,352,590Occupancy and Equipment Cost5,422,8392,889,6541,626,725Advertising and Promotion13,970,8347,537,2654,842,392Provision for Losses59,000148,0141,428,663Amortization of Goodwill363,002363,00294,152Other7,763,0144,717,4062,846,280Total Expenses Excluding Interest55,813,22735,921,16024,189,575Income Before Income Taxes21,425,11318,417,59310,830,028Taxes7,602,9647,259,2483,798,881Net Income$13,822,149$11,158,345$7,031,147EPS$1.00$0.87$0.55Shares Outstanding13,768,88912,813,82312,813,823Source: Ameritrade Annual Report, 1997.Exhibit 1Consolidated Annual Income Statements for the Fiscal Year Ending in SeptemberCost of Capital at Ameritrade201-04619971996ASSETSCash & Gash Equivalents$53,522,447.00$15,767,170.00Cash & Investments Segregated in Compliance with Federal Regulations319,763,921175,668,497Receivable from Brokers, Dealers, & Clearing Organizations17,823,64015,096,862Receivable from Customers & Correspondents325,407,147166,075,055Furniture, Equipment, & Leasehold Improvements8,709,9233,746,178Goodwill6,346,7636,709,765Equity Investments7,597,9727,157,783Other Investments5,000,0005,000,000Deferred Income Taxes39,314444,378Other Assets13,145,6166,013,544Total Assets$757,356,743$401,679,232LIABILITIES & STOCKHOLDERS EQUITYLiabilities:Payable to Brokers, Dealers, & Clearing Organizations1,404,9991,193,479Payable to Customers & Correspondents666,279,440356,942,970Accounts Payable and Accrued Liabilities19,252,9317,221,008Notes Payable to Bank-4,853,000Income Taxes Payable3,430,279806,711Total Liabilities690,367,649371,017,168Stockholder’s Equity:Class A Common Stock131,534114,494Class B Common Stock13,64413,644Additional Paid in Capital23,297,506809,665Retained Earnings43,546,41029,724,261Total Stockholder’s Equity66,989,09430,662,064Total Liabilities & Stockholders Equity$757,356,743$401,679,232Source: Ameritrade Annual Report, 1997.Exhibit 2Consolidated Annual Balance Sheets for the Fiscal Year Ending in September201-046Cost of Capital atPrevailing Yields on US Government Securities (August 31, 1997)Annualized Yield to Maturity3-Month T-BiIls5.24%1-Year Bonds5.59%5-Year Bonds6.22%10-Year Bonds6.34%20-Year Bonds6.69%30-Year Bonds6.61%Historic Average Total Annual Returns on US Government Securities and Common Stocks (1950 -1996)Average Annual ReturnStandard DeviationT-Bills5.2%3.0%6.4%6.6%6.0%10.8%14.0%16.8%17.8%25.6%Historic Average Total Annual Returns on US Government Securities and Common Stocks (1929 - 1996)Average Annual ReturnStandard DeviationT-Bills3.8%3.3%5.4%5.8%5.5%9.2%12.7%20.3%17.7%34.1%Exhibit 3Capital Market Return Data (Historical and Current)...
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This note was uploaded on 05/26/2011 for the course ECON 303 taught by Professor Abc during the Spring '11 term at Argosy University.

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Ameritrade Case solution - 201-046Cost of Capital at

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