Hello. I'd like the functions in order to calculate the following myself. I am attaching the numbers I have for Ecolab but I am not sure if it contains what I need in order to solve this so if at least I can get the formulas then I can figure it out before-tax and after-tax component cost of debt; (Note: Use 21 % tax rate for your chosen corporation). component cost of preferred stock if the company uses preferred stocks in its capital structure; three approaches (CAPM, DCF, bond-yield-plus-risk-premium) to estimate the component cost of common equity of the firm. Then assign a weight for each method and estimate weighted average cost of equity. Using this average: - Calculate the firm’s weighted average cost of capital (WACC) using market-based capital weights. - Calculate the firm’s weighted average cost of capital (WACC) using book-based capital weights. - Calculate the firm’s weighted average cost of capital (WACC) using optimal capital structure weights Ecolab Inc (NYS: ECL) Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date 12/31/2018 Currency USD Audit Status Not Available Consolidated Yes Scale Thousands Cash & cash equivalents 114700 Short-term investments - Accounts receivable, gross 2723100 Allowance for doubtful accounts 60600 Accounts receivable, net 2662500 Finished goods 1016900 Raw materials & parts 525600 Inventories at first-in, first-out ("FIFO") cost 1542500 Excess of FIFO cost over last-in, first-out cost -3900 Inventories 1546400 Deferred income taxes - Prepaid expenses & other current assets - Prepaid assets 132100 Derivative assets 42800 Other current assets 35000 Other current assets 354100 Total current assets 4677700 Taxes receivable 144200 Land 214500 Buildings & improvements - Buildings & leasehold improvements 1279400 Leasehold improvements - Buildings & leaseholds - Machinery & equipment 2313700 Merchandising equipment - Merchandising & customer equipment 2565500 Capitalized software 666200 Construction in progress 400200 Property, plant & equipment, gross 7439500 Accumulated depreciation 3603500 Property, plant & equipment, net 3836000 Investment in Henkel-Ecolab joint venture - Net assets of Ecolab Europe - Net assets of Ecolab Inc. & discontinued operations - Goodwill 7078000 Other intangible assets, net 3797700 Other assets, net - Intangible assets, net - Deferred income taxes 105100 Deferred financing costs - Pension 39000 Derivative assets 11800 Restricted cash 179300 Sole supply fees - Other assets 349900 Other assets 685100 Total assets 20074500 Commercial paper 165400 Notes payable 176800 Long-term debt, current maturities 401400 Short-term debt 743600 Accounts payable 1255600 Compensation & benefits 579700 Property, payroll & other taxes - Other accrued expenses - Dividends payable - Income taxes 100600 Other current liabilities - Discounts & rebates 291300 Dividends payable 132400 Interest payable 44500 Taxes payable, other than income 116900 Derivative liabilities 20100 Foreign exchange contracts - Restructuring 73700 Contract liability 75800 Future consideration payable to Champion sellers - Other current liabilities 251400 Other current liabilities 1006100 Total current liabilities 3685600 Senior notes 6447400 Series A & B senior notes 249400 Notes - Capital lease obligations 6200 Euro notes - Commercial paper - Medium-term notes - Multicurrency credit agreement - Other long-term debt - Total debt 6703000 Long-term debt, current maturities 401400 Long-term debt 6301600 Postretirement health care & pension benefits 944300 Deferred income taxes 764600 Deferred income taxes - Income taxes payable - noncurrent - Restructuring - Other liabilities - Other liabilities 324800 Other liabilities - Series A cumulative perferred stock - Total liabilities 12020900 Common stock 357000 Additional paid-in capital 5633200 Retained earnings 8909500 Deferred compensation - Cumulative translation - Unrealized gain (loss) on derivative financial instruments, net of tax 2000 Unrecognized pension & postretirement benefit expense, net of tax -518900 Cumulative translation, net of tax -1244800 Accumulated other comprehensive income (loss) -1761700 Treasury stock 5134800 Total Ecolab, Inc. shareholders' equity 8003200 Noncontrolling interest 50400 Total equity 8053600
Cost of Capital
Shareholders and investors who invest into the capital of the firm desire to have a suitable return on their investment funding. The cost of capital reflects what shareholders expect. It is a discount rate for converting expected cash flow into present cash flow.
Capital Structure
Capital structure is the combination of debt and equity employed by an organization in order to take care of its operations. It is an important concept in corporate finance and is expressed in the form of a debt-equity ratio.
Weighted Average Cost of Capital
The Weighted Average Cost of Capital is a tool used for calculating the cost of capital for a firm wherein proportional weightage is assigned to each category of capital. It can also be defined as the average amount that a firm needs to pay its stakeholders and for its security to finance the assets. The most commonly used sources of capital include common stocks, bonds, long-term debts, etc. The increase in weighted average cost of capital is an indicator of a decrease in the valuation of a firm and an increase in its risk.
Hello. I'd like the functions in order to calculate the following myself. I am attaching the numbers I have for Ecolab but I am not sure if it contains what I need in order to solve this so if at least I can get the formulas then I can figure it out
- before-tax and after-tax component cost of debt; (Note: Use 21 % tax rate for your chosen corporation).
- component cost of
preferred stock if the company uses preferred stocks in its capital structure; - three approaches (CAPM, DCF, bond-yield-plus-risk-premium) to estimate the component cost of common equity of the firm. Then assign a weight for each method and estimate weighted average
cost of equity . Using this average:
- Calculate the firm’s weighted average cost of capital (WACC) using market-based capital weights.
- Calculate the firm’s weighted average cost of capital (WACC) using book-based capital weights.
- Calculate the firm’s weighted average cost of capital (WACC) using optimal capital structure weights
Ecolab Inc (NYS: ECL) | |
Exchange rate used is that of the Year End reported date | |
As Reported Annual |
|
Report Date | 12/31/2018 |
Currency | USD |
Audit Status | Not Available |
Consolidated | Yes |
Scale | Thousands |
Cash & cash equivalents | 114700 |
Short-term investments | - |
Accounts receivable, gross | 2723100 |
Allowance for doubtful accounts | 60600 |
Accounts receivable, net | 2662500 |
Finished goods | 1016900 |
Raw materials & parts | 525600 |
Inventories at first-in, first-out ("FIFO") cost | 1542500 |
Excess of FIFO cost over last-in, first-out cost | -3900 |
Inventories | 1546400 |
- | |
Prepaid expenses & other current assets | - |
Prepaid assets | 132100 |
Derivative assets | 42800 |
Other current assets | 35000 |
Other current assets | 354100 |
Total current assets | 4677700 |
Taxes receivable | 144200 |
Land | 214500 |
Buildings & improvements | - |
Buildings & leasehold improvements | 1279400 |
Leasehold improvements | - |
Buildings & leaseholds | - |
Machinery & equipment | 2313700 |
Merchandising equipment | - |
Merchandising & customer equipment | 2565500 |
Capitalized software | 666200 |
Construction in progress | 400200 |
Property, plant & equipment, gross | 7439500 |
Accumulated |
3603500 |
Property, plant & equipment, net | 3836000 |
Investment in Henkel-Ecolab joint venture | - |
Net assets of Ecolab Europe | - |
Net assets of Ecolab Inc. & discontinued operations | - |
7078000 | |
Other intangible assets, net | 3797700 |
Other assets, net | - |
Intangible assets, net | - |
Deferred income taxes | 105100 |
Deferred financing costs | - |
Pension | 39000 |
Derivative assets | 11800 |
Restricted cash | 179300 |
Sole supply fees | - |
Other assets | 349900 |
Other assets | 685100 |
Total assets | 20074500 |
Commercial paper | 165400 |
Notes payable | 176800 |
Long-term debt, current maturities | 401400 |
Short-term debt | 743600 |
Accounts payable | 1255600 |
Compensation & benefits | 579700 |
Property, payroll & other taxes | - |
Other accrued expenses | - |
Dividends payable | - |
Income taxes | 100600 |
Other current liabilities | - |
Discounts & rebates | 291300 |
Dividends payable | 132400 |
Interest payable | 44500 |
Taxes payable, other than income | 116900 |
Derivative liabilities | 20100 |
Foreign exchange contracts | - |
Restructuring | 73700 |
Contract liability | 75800 |
Future consideration payable to Champion sellers | - |
Other current liabilities | 251400 |
Other current liabilities | 1006100 |
Total current liabilities | 3685600 |
Senior notes | 6447400 |
Series A & B senior notes | 249400 |
Notes | - |
Capital lease obligations | 6200 |
Euro notes | - |
Commercial paper | - |
Medium-term notes | - |
Multicurrency credit agreement | - |
Other long-term debt | - |
Total debt | 6703000 |
Long-term debt, current maturities | 401400 |
Long-term debt | 6301600 |
Postretirement health care & pension benefits | 944300 |
Deferred income taxes | 764600 |
Deferred income taxes | - |
Income taxes payable - noncurrent | - |
Restructuring | - |
Other liabilities | - |
Other liabilities | 324800 |
Other liabilities | - |
Series A cumulative perferred stock | - |
Total liabilities | 12020900 |
Common stock | 357000 |
Additional paid-in capital | 5633200 |
8909500 | |
Deferred compensation | - |
Cumulative translation | - |
Unrealized gain (loss) on derivative financial instruments, net of tax | 2000 |
Unrecognized pension & postretirement benefit expense, net of tax | -518900 |
Cumulative translation, net of tax | -1244800 |
Accumulated other comprehensive income (loss) | -1761700 |
5134800 | |
Total Ecolab, Inc. shareholders' equity | 8003200 |
Noncontrolling interest | 50400 |
Total equity | 8053600 |
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