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Unformatted text preview: of the tax shield to Haverhill if it goes through with the debt issuance? 2. Why does the debt overhang problem make it difficult for firms facing financial distress to finance projects with new equity? 3. Do Higgins Chapter 6, #5. 4. Do Higgins, Chapter 6, #14. Do only parts a, b, c, f, g. (Studying past annual reports, as suggested in the problem, might be useful for part f, if you want to assess the volatility of Avons cash flow.) 5. Look up financial statements and compare some leverage ratios for Boeing and Oracle for fiscal year end 2008. Calculate at least the following ratios: Net Income/Interest Expense (Interest Coverage), Total Liabilities/Total Assets, and Long-term Debt/Equity. a. Which company has the higher financial leverage? b. Given the nature of these companies' operations and assets, which would you expect to exhibit higher leverage? Why? 2...
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This note was uploaded on 03/01/2012 for the course BUS M 401 taught by Professor Toddmitton during the Fall '10 term at BYU.
- Fall '10