At the end of last week you competed a financial assessment for each of the four automobile
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At the end of last week you competed a financial assessment for each of the four automobile companies. This assessment compared the company's last five years financial performance to the company's cost of capital. Using these financial results and any other financial information, please answer the following question:
Discussion Question:Which company do you believe performed the best over the past five-year period and which company do you believe will do the best in the future? Again, justify your answer with evidence
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A 1 Tesla's Balance Sheet: 2 Year 3 Total Assets 4 Operating Liabilities 5 Net Operating Assets 6 7 Total Debt 8 Total Equity and Claims 9 Total Debt, Equity and Claims 10 11 Tesla's Income Statement: 12 Year 13 Total Revenue 14 Cost of Revenue, Total 15 Selling, General and Other expense 16 Operating Income 17 $ $ 40 Required income in dollars 41 42 Year 43 Operating Income earned 44 Less required income 45 Economic profit or (loss) 46 $ 47 Another way to look at this: 48 Return on invested capital 49 Weighted average cost of capital 50 Spread 51 52 53 $ $ $ $ $ $ $ 30 31 Debt 32 Equity 33 34 Required return (weighted average cost of capital) 35 36 Calculate the Economic Profit (Economic Value Added) 37 Year 38 Net Operating Assets 39 times the required return $ $ $ B $ 2016 22,664 $ 2,917 $ 19,747 $ $ 23 Market value of debt (use book or amount disclosed in the footnotes if different) 24 Number of common shares outstanding 25 Market price of the common stock on July 13, 2022 26 Market value of equity (number of shares times the stock price) 27 28 Calculate the required return (weighted average cost of capital) 29 Market Values $ $ $ 10,315 $ 7,128 $ 12,619 $ 14,625 $ 19,747 $ 24,940 $ 2016 7,000 $ 5,401 $ 2,266 $ (667) $ 18 Given information for Tesla: 19 Cost of debt Tesla (from the footnotes to the financial statements) 20 Beta for Tesla (from Yahoo or other financial sources) 21 Normalized risk free rate of return in the market (observing the 10 rate on government issued securities) 22 Equity risk premium (from historical studies of the market) 3,099 853,299 856,398 2016 19,747 14.34% 2,832 C $ -3.38% 14.34% -10.96% 2017 28,655 $ 3,715 24,940 $ $ 2016 (667) $ 2,832 $ (3,499) $ 2017 11,759 $ 9,536 $ 3,855 $ (1,632) $ Weights 0% 100% 2017 24,940 $ 14.34% 3,576 -6.54% 14.34% -7.80% D $ 2017 (1,632) $ 3,576 $ (5,208) $ 2018 29,740 $ 4,777 $ 24,963 $ Component Cost 2018 21,461 $ 17,419 $ 4,429 $ (387) $ 12,992 $ 24,963 $ 11,971 $ 13,419 $ 11,739 $ 15,028 $ 31,544 28,447 $ 43,283 3.31% 14.38% 2018 24,963 $ 14.34% 3,580 $ E 2018 (387) $ 3,580 $ (3,967) $ -1.55% 14.34% -12.79% 2019 2020 34,309 $ 52,148 5,862 $ 8,865 28,447 $ 43,283 Weighted Cost 2019 24,578 $ 20,509 $ 4,138 $ (69) $ 0.01% 14.33% 14.34% $ F $ $ -0.24% 14.34% -14.10% 2019 (69) $ 4,079 $ (4,148) $ 3.31% 2.08 3.98% 5.00% 3,099 3,164 269.69 853,299 2021 $ 62,131 $ 14,328 $ 47,803 2019 2020 28,447 $ 43,283 14.34% 6,207 $ 14.34% 4,079 $ G 2022 $ 81,462 2020 2021 31,536 $ 53,823 24,906 $ 40,217 $ 60,465 4,636 $ 7,083 $ 7,365 1,994 $ 6,523 $ 13,632 4.61% 14.34% -9.73% 6,834 $ 3,099 $ 40,969 $ 58,431 $ 47,803 $ 61,530 H 2022 $ 82,338 $ 20,808 $ 61,530 2021 $ 47,803 14.34% 6,855 $ 13.65% 14.34% -0.69% 2022 $ 61,530 14.34% 8,823 2020 2022 2021 1,994 $ 6,523 $ 13,632 6,207 $ 6,855 $ 8,823 (4,213) $ (332) $4,809 22.16% 14.34% 7.82% I J K A 1 Tesla's Balance Sheet: 2 Year 3 Total Assets 4 Operating Liabilities 5 Net Operating Assets 6 7 Total Debt 8 Total Equity and Claims 9 Total Debt, Equity and Claims 10 11 Tesla's Income Statement: 12 Year 13 Total Revenue 14 Cost of Revenue, Total 15 Selling, General and Other expense 16 Operating Income 17 $ $ 40 Required income in dollars 41 42 Year 43 Operating Income earned 44 Less required income 45 Economic profit or (loss) 46 $ 47 Another way to look at this: 48 Return on invested capital 49 Weighted average cost of capital 50 Spread 51 52 53 $ $ $ $ $ $ $ 30 31 Debt 32 Equity 33 34 Required return (weighted average cost of capital) 35 36 Calculate the Economic Profit (Economic Value Added) 37 Year 38 Net Operating Assets 39 times the required return $ $ $ B $ 2016 22,664 $ 2,917 $ 19,747 $ $ 23 Market value of debt (use book or amount disclosed in the footnotes if different) 24 Number of common shares outstanding 25 Market price of the common stock on July 13, 2022 26 Market value of equity (number of shares times the stock price) 27 28 Calculate the required return (weighted average cost of capital) 29 Market Values $ $ $ 10,315 $ 7,128 $ 12,619 $ 14,625 $ 19,747 $ 24,940 $ 2016 7,000 $ 5,401 $ 2,266 $ (667) $ 18 Given information for Tesla: 19 Cost of debt Tesla (from the footnotes to the financial statements) 20 Beta for Tesla (from Yahoo or other financial sources) 21 Normalized risk free rate of return in the market (observing the 10 rate on government issued securities) 22 Equity risk premium (from historical studies of the market) 3,099 853,299 856,398 2016 19,747 14.34% 2,832 C $ -3.38% 14.34% -10.96% 2017 28,655 $ 3,715 24,940 $ $ 2016 (667) $ 2,832 $ (3,499) $ 2017 11,759 $ 9,536 $ 3,855 $ (1,632) $ Weights 0% 100% 2017 24,940 $ 14.34% 3,576 -6.54% 14.34% -7.80% D $ 2017 (1,632) $ 3,576 $ (5,208) $ 2018 29,740 $ 4,777 $ 24,963 $ Component Cost 2018 21,461 $ 17,419 $ 4,429 $ (387) $ 12,992 $ 24,963 $ 11,971 $ 13,419 $ 11,739 $ 15,028 $ 31,544 28,447 $ 43,283 3.31% 14.38% 2018 24,963 $ 14.34% 3,580 $ E 2018 (387) $ 3,580 $ (3,967) $ -1.55% 14.34% -12.79% 2019 2020 34,309 $ 52,148 5,862 $ 8,865 28,447 $ 43,283 Weighted Cost 2019 24,578 $ 20,509 $ 4,138 $ (69) $ 0.01% 14.33% 14.34% $ F $ $ -0.24% 14.34% -14.10% 2019 (69) $ 4,079 $ (4,148) $ 3.31% 2.08 3.98% 5.00% 3,099 3,164 269.69 853,299 2021 $ 62,131 $ 14,328 $ 47,803 2019 2020 28,447 $ 43,283 14.34% 6,207 $ 14.34% 4,079 $ G 2022 $ 81,462 2020 2021 31,536 $ 53,823 24,906 $ 40,217 $ 60,465 4,636 $ 7,083 $ 7,365 1,994 $ 6,523 $ 13,632 4.61% 14.34% -9.73% 6,834 $ 3,099 $ 40,969 $ 58,431 $ 47,803 $ 61,530 H 2022 $ 82,338 $ 20,808 $ 61,530 2021 $ 47,803 14.34% 6,855 $ 13.65% 14.34% -0.69% 2022 $ 61,530 14.34% 8,823 2020 2022 2021 1,994 $ 6,523 $ 13,632 6,207 $ 6,855 $ 8,823 (4,213) $ (332) $4,809 22.16% 14.34% 7.82% I J K
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International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
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