7 July 2013
The capital structure for a company can be very important for the success of the company. Many aspects of the business must be evaluated in order to determine the appropriate capital structure. Throughout this paper, three companies will be evaluated. The three companies being evaluated are eBay (NasdaqGS: EBAY), The Clorox Company (NYSE: CLX), and Alaska Air Group Inc. (NYSE: ALK). Company Overview
eBay is a very popular company for people of all walks and from all around the world. According to the company’s website, eBay “is a global commerce platform and payments leader connecting millions of buyers and sellers. We do so through eBay, the world's largest online marketplace, which allows users to buy and sell in nearly every country on earth; through PayPal, which enables individuals and businesses to securely, easily and quickly send and receive digital payments; and through GSI, which facilitates ecommerce, multichannel retailing and digital marketing for global enterprises”
The Clorox Company has been a leader in cleaning and household supplies for many years. According to their website, “The Clorox Company manufactures and markets consumer and professional products worldwide. The company’s Cleaning segment offers laundry additives, including bleach products under the Clorox brand, and Clorox 2 stain fighter and color booster; home-care products primarily under the Clorox, Formula 409, Liquid-Plumr, Pine-Sol, S.O.S, and Tilex brands; naturally derived home care products under the Green Works brand; and cleaning and disinfecting products under the Clorox, Dispatch, Aplicare, HealthLink, and Clorox Healthcare brands. Its Household segment offers plastic bags, wraps, and containers under the Glad brand; cat litter products under the Fresh Step, Scoop Away, and Ever Clean brands; and charcoal products under the Kingsford and Match Light brands.”
According to their website, “Alaska Air Group, Inc., is the holding company for Alaska Airlines and Horizon Air, Seattle-based carriers that collectively serve over 90 destinations in the United States, Canada, and Mexico. Alaska Air Group was organized as a Delaware corporation in 1985.” Financial Standing of all three Companies
A review of the companies’ financial reports have revealed key statistics about each of the company’s standings. All amounts listed below are in millions of dollars. Total current assets and long-term assets of all three companies. Ebay Inc. $21,583M (Current) $3,044M (Long-Term)
The Clorox Company $1,279M (Current) $1,039 (Long-Term) Alaska Air Group, Inc. $1,737 (Current) $3,609 (Long-Term) Total current liabilities and long-term liabilities of all three companies. Ebay Inc. $11,066M (Current) $4,106M (long-term)
The Clorox Company $1,365M (Current) $2,125M (Long-term)
Alaska Air Group, Inc. $1,501M (Current) $871M (Long-term) Revenue of each company.
Ebay Inc. $3,992M
The Clorox Company $5,620M
Alaska Air Group, Inc. $4,750M
Total debt/equity ratios of all three companies.
Ebay Inc. 21.39
The Clorox Company 1,684.87
Alaska Air Group, Inc. 66.69
Profit margin, returns on assets, and return on equity ratios of all three companies. Ebay Inc. 18.68% (PM) 5.78% (ROA) 13.64% (ROE)
The Clorox Company 10.02% (PM) 13.47% (ROA) 2,452.17% (ROE) Alaska Air Group, Inc. 6.57% (PM) 6.94% (ROA) 23.28% (ROE) Betas of all three companies.
Ebay Inc. 0.74
The Clorox Company 0.37
Alaska Air Group, Inc. 1.11
Riskiness of all three companies
The riskiness of each business can easily be measured by the beta that is reported for that company. Simply put, the higher the beta of a company, the more volatile the company is. This does not specifically indicate that the company is inherently more risky, but just that they have more fluctuation than they rest of the market that they are a part of....