Essay About Capital Structure Market Debt And Hmc Ltd

Honda Motors Corporation Ltd.
Honda Motors Corporation LTD.Case 5 To:AF495From:Qi Hecc:Date:December 2, 2016Re:Capital Structure Market Debt to Capital (Unadjusted)Effective Tax RateStd dev in Stock PriceEBITDA/ValueFixed Assets/ Total AssetsCapital Spending/Total AssetTime Interest Earned/Interest Coverage Ratioindustry:48.95%4.71%1.03757.93%0.36%4.39% Company:80.91%36.05%0.9879691283.59%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 RateAccording 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 PriceStandard 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/ValueIn 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 AssetsHMC 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 AssetHMC 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 RatioHMC 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.