To get an overall picture of each company’s capital structure it is helpful to see a chart that summarizes the company’s capital structure over the past decade. To obtain this chart, choose a company to start with and select FINANCIALS. Next, select MORE > THOMSON REPORTS & CHARTS > CAPITAL STRUCTURE. This should generate a chart that plots the company’s long-term debt, common equity, and total current liabilities over the past decade. What, if any, are the major trends that emerge from looking at these charts? Do these companies tend to have relatively high or relatively low levels of debt? Do these companies have significant levels of current liabilities? Have their capital structures changed over time? (Note an alternative chart can be found by selecting FINANCIALS > FUNDAMENTAL RATIOS> WORLDSCOPE RATIOS > DEBT TO ASSETS & EQUITY RATIOS.)

Access the Thomson ONE problems through the ThomsonNOW Web site. Use the Thomson ONE—Business School Edition online database to work this chapter’s questions.

Exploring the Capital Structures for Four of the World’s Leading Auto Companies

This chapter provides an overview of the effects of leverage and describes the process that firms use to determine their optimal capital structure. The chapter also indicates that capital structures tend to vary across industries and across countries. If you are interested in exploring these differences in more detail, Thomson One provides information about the capital structures of each of the companies it follows.

The following discussion questions demonstrate how we can use this information to evaluate the capital structures for four of the world’s leading automobile companies: General Motors (GM), Ford (F), BMW (BMW), and Toyota (J:TYMO). As you gather information on these companies, be mindful of the currencies in which these companies’ financial data are reported.