Chapter 4-table 12: Do financial statements help in Financial decisions and corporate valuation

Table 12: Distribution of Debt to total assets by period
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Bank---------------------------2004-------2005-------2006-------2007-------2008
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1. Compass Group PLC----0.312------0.320-------0.271-------0.252-------0.232

2. Toronto Dominion Bank-0.167------0.142-------0.144-------0.158-------0.190

3. Harris Corp------------------0.185-----0.165-------0.223-------0.256-------0.186

4. Morgan Stanley--------------0.189----0.164--------0.176-------0.223-------0.278

5. Boeing Co--------------------0.217-----0.179--------0.184-------0.139-------0.140
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Table 12 shows the distribution of Debt to total assets of the selected banks of the United State of America by period. It reveals that Compass Group PLC has a decreased in solvency ratio as evidenced by 0.312 or 31.2%, 0.320 or 32.0%, 0.271 or 27.1%, 0.252 or 25.2% and 0.232 or 23.2% respectively. This is desirable because it has a very definite effect on the company’s ability to obtain additional financing.
It is also notable that the Boeing Co’s solvency ratio decreases from 0.217 or 21.7% to 0.140 or 14.0% in 2004 to 2008. This implies that the company uses significantly less debt.
The Toronto Dominion Bank solvency ratio has minimal increase from 2004 to 2008, approximately 0.167 or 16.7% to 0.190 or 19.0%. This means that the company uses minimal debt.
Harris Corp solvency ratio has very little increased from 2004 to 2008 as evidenced by the values 0.185 or 18.5%, 0.165 or 16.5%, 0.223 or 22.3%, 0.256 or 25.6% and 0.186 or 18.6% respectively. This means that the company increased their debt, but, very minimal.
Morgan Stanley has a continuously increasing solvency ratio with value 0.189 or 18.9%, 0.164 or 16.4%, 0.176 or 17.6%, 0.223 or 22.3%, and 0.278 or 27.8% respectively. However, this increase is not very high. This increase is just right for the market because of the very little financial risk.