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Essay / Research Paper Abstract
A 3 page paper discussing the effects of hypothetical changes in assets and the effects of those changes on other value ratios. Based in Ann Arbor, Michigan, Borders Group (NYSE:BGP) operates 434 Borders book stores and also is the parent of Waldenbooks. Its primary competition in the brick-and-mortar setting comes in the form of Barnes and Noble, with Books A Million representing the industry’s distant third. The purpose here is to assess several current financial ratios and determine how those ratios would be affected by a 20 percent increase in assets. Bibliography lists 5 sources.
Page Count:
3 pages (~225 words per page)
File: CC6_KSfinBorder.rtf
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Unformatted sample text from the term paper:
Arbor, Michigan, Borders Group (NYSE:BGP) operates 434 Borders book stores and also is the parent of Waldenbooks (Reuters, 2004). Its primary competition in the brick-and-mortar setting comes in the
form of Barnes and Noble, with Books A Million representing the industrys distant third. The purpose here is to assess several current financial ratios and determine how those ratios
would be affected by a 20 percent increase in assets. Present Financial Ratios At the time of writing, Borders Groups book value is
13.156 per share (Borders, 2004a). The company has 78.18 million shares outstanding, bringing the companys total book value to $1,028,536,080, $2 million less than the value of shareholders equity.
Its market capitalization is $1.82 billion (Borders, 2004). Borders leverage value is 2.20: Assets ? Shareholders Equity (Financial Ratios, 2004).
= 2,268,200,000 ? 1,030,600,000 = 2.20085 = 2.20 Note: Original order states, "Identify the firms book value, market value,
and levered value according to the M&M model." "M&M model" not defined or referenced in the order. Market value can be represented
by several means, the simplest of which is "simply its market capitalization; that is, the market price per share multiplied by the number of outstanding shares" (Security Analysis, 2004).
Using this approach, Borders market value equals market capitalization, or $1.82 billion (Borders, 2004). Increase in Assets Book value bears only weak relation
to market value, primarily because it "does not include such intangibles as goodwill, copyrights, and patents" (Borders, 2004). Were Borders assets to increase 20 percent, Borders market value may
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