Finance Assignment Essay Example | Topics and Well Written Essays - 1500 words - 1

Finance Assignment - Essay Example withal, the best practise to calculate the exist of capital is to consider the market value of the assets, in which case, the difference can be significant.The WACC is calculated utilize only the cost of debt and the cost of equity. It is important to note that raising capital via. Debt increases the beta value of the company, i.e., the peril of investing is increase, as the company is obligated to pay the debt. consequently the cost of equity is also increased due to this change in capital structure.The debt ratio of Boral limited is computed as the ratio of numerate debt to total assets which is equal to (1518/5816.60) 26.1%. This is lesser when compared to the Commonwealth bank which has a higher(prenominal) debt ratio. Also, the Commonwealth bank of Australia has lesser get around term money and in order to compute the liquidity position of the bank, the cash as intumesce as the loans and deposits are to be considered. The gearing ratio o f the bank has to be much higher, as the constitutional operation of the bank involves taking deposits and lending loans. However the gearing ratio of Boral cannot go much higher as it will affect the debt rating of the company.From the balance sheets, it is evident that Boral Limited has a number of non-tangible assets whereas exclusively the assets and liabilities are monetary in nature. The banks normally seek and increase liabilities in order to build the assets. However manufacturing companies tend to build assets and thrive to increase the value.As there are opportunities for crease development with the excess capital raised by making the company public, it is essential to estimate the business growth. This will switch an estimate on the earnings per share. Based on the earnings, the plowback rate can be computed for continuous growth. Hence from the earnings per share and the plowback rate, the dividend payments can be forecast during the growth period.Case 1 Assuming tha t the business can expand for the next 6 years and