Honda Motors Corporation Ltd.
Autor: Edward He • December 8, 2016 • Case Study • 467 Words (2 Pages) • 646 Views
Honda Motors Corporation LTD. |
Case 5
To: | AF495 |
From: | Qi He |
cc: | |
Date: | December 2, 2016 |
Re: | Capital Structure |
| Market Debt to Capital (Unadjusted) | Effective Tax Rate | Std dev in Stock Price | EBITDA/Value | Fixed Assets/ Total Assets | Capital Spending/Total Asset | Time Interest Earned/Interest Coverage Ratio |
industry: | 48.95% | 4.71% | 1.0375 | 7.93% | 0.36% | 4.39% |
|
Company: | 80.91% | 36.05% | 0.987969128 | 3.59% | 37.40% | 3.48% | 277% |
Market Debt to Capital(Unadjusted) |
As the table showing above, the average industry Market Debt to Capital is 48.95%. The HMC LTD is 80.91%. Market Debt to capital is calculated by taking company debt and dividing it by the total capital. The total capital is including all debt and the stockholder’s equity. In the other word, the lower percentage is the better. HMC LTD has higher debt than its industry average. |
Effective Tax Rate |
According to HMC LTD income statement, the income before tax is $5,654,000 and the total of taxes is $2,038,000. So, the effective tax rate is 36.05%. HMC LTD, has nearly 32% more tax rate than the average of industry. |
STD. Dev in Stock Price |
Standard deviation in stock price represents the range of price change in daily. Lower percentage represents that the stock price will has the lower risk. HMC LTD. has 0.987 which is lower than the industry 1.0375. It shows HMC LTD.’s stock price has more consistent performance than the industry average. |
EBITDA/Value |
In last fiscal year, HMC LTD. has only 3.59% EBITDA/Value. It is lower than the industry 7.93%. It shows that HMC LTD has lower percentage of available cash than its industry. It can mean that HMC LTD. has higher debt need than its industry. |
Fixed Assets/ Total Assets |
HMC LTD has 37.40% fixed asset/ total assets. It is much higher than industry 0.36%. It shows HMC LTD can have larger debt ability compare to its industry. |
Capital Spending/Total Asset |
HMC LTD. has 3.48% capital spending/total asset. It is lower than industry 4.39%. It shows HMC LTD. has less available capital to investment to growth compared to its industry. |
Time Interest Earned/Interest Coverage Ratio |
HMC LTD. has $5,654,000 EBIT in last fiscal year and has interest payment $2,038,000. The ratio is 277%. It shows that HMC LTD has healthy earning to pay his interest. |
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