The Study Area
This study primarily focused on the information given by the Financial Statement of the Compass Group PLC, Toronto Dominion Bank, Harris Corp, Morgan Stanley, and Boeing Co. for the last five years of the
Statistical Treatment
To examine how financial statement of the Compass Group PLC, Toronto Dominion Bank, Harris Corp, Morgan Stanley, and Boeing Co. Help in Financial Decisions and Corporate Valuations, the following statistical formulas were used:
a. Current ratio. This was computed to determine the short-term solvency ratio or working capital ratio. It also used to measure Liquidity risk.
Current ratio = Current Assets .
Current Liabilities
b. Return on Assets. This was used to determine the profitability of the company.
Return on Assets = Net Income
Total Assets
c. Return on Equity. This was used to determine the profit of the company. This will compare to the return on assets to determine the financial risk of the company.
Return on Equity = Net Income
Total Equity
d. Debt to total assets. This was used to measure the percentage of total assets provided by the creditors.
Debt to total assets = Total Debt .
Total assets
e. Total Cost
This was computed to get the unknown value of historical cost of the selected company
TC = PE + PEx + I
Where: TC = total cost every period
PE = Prepaid expenses value
PE = Plant and equipment value
I = Intangible
a. Firm Value . This was computed to strengthen the deal with an investment project subject to risk.
Where: TR = total revenue
TC = total cost
r = discount rate (10%)
n = years (5)
b. Market Value. This was computed because it is one of the important variables in this study. This is to determine the dollar amount at which an item can be sold of the Compass Group PLC, Toronto Dominion Bank, Harris Corp, Morgan Stanley, and Boeing Co. on the last five years.
MV = LTB + SE
Where: MV = Market value
LTB = Long term debt
SE = Shareholders’ Equity
g. DuPond Framework
This was computed to analyze financial statement of the selected company’s. This was used to summarize the company’s performance.
Return on Equity = Profitability X Efficiency X Leverage
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