Calculations and financial analysis.

User Generated

eeee1109

Business Finance

Description

Notes:

  • All questions are based on the annual reports of Magna International and Martinrea International. The 2016 annual reports are available on Brightspace. For prior year statements and reports, you should download them from the appropriate corporate website, or SEDAR (https://www.sedar.com).
  • Calculations should be carried to 4 decimal places. For example, 0.21164 becomes 0.2116 or 21.16%.
  • Additional information about the industry, competitors, or other economic information that you consider relevant to your analysis may be added as appropriate. All sources should be clearly referenced, including Financial Statement footnotes.
  • This Assignment may be completed as an individual or in a group of two. Groups larger than two will not be accepted.

Unformatted Attachment Preview

Notes: • All questions are based on the annual reports of Magna International and Martinrea International. The 2016 annual reports are available on Brightspace. For prior year statements and reports, you should download them from the appropriate corporate website, or SEDAR (https://www.sedar.com). • Calculations should be carried to 4 decimal places. For example, 0.21164 becomes 0.2116 or 21.16%. • Additional information about the industry, competitors, or other economic information that you consider relevant to your analysis may be added as appropriate. All sources should be clearly referenced, including Financial Statement footnotes. • This Assignment may be completed as an individual or in a group of two. Groups larger than two will not be accepted. 1. (20 Marks) Operating Leases a. Estimate the off-balance sheet lease liability for Magna at December 31, 2016 using a discount rate of 6%. b. Compute RNOA ratio, Liability-to-Equity ratio and Times Interest Earned ratio for Magna using the reported financial statements and the financial statements adjusted for the constructive capitalization of the operating leases. Briefly discuss how operating leases affect these two ratios. Use the statutory income tax rate when needed. 2. (20 marks) Income Tax a. Compare the statutory and effective tax rates of Magna and Martinrea for both 2016 and 2015 and summarize your comparison. b. What contributed the most to the deferred tax assets of Manga at the year ending December 31, 2016? Explain why this item created a deferred tax asset. c. What contributed the most to the deferred tax liability for Magna at the year ending December 31, 2016? Explain why this item created a deferred tax liability. d. Magna reported “tax benefit of loss carry forwards” of $715 million as of December 31, 2016 and “Valuation allowance against tax benefit of loss carry forwards” of $615 million. How do you interpret this?
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

This question has not been answered.

Create a free account to get help with this and any other question!

Related Tags