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are dishes included in cost of goods sold for restaurant cost of capital of uk companies - accounting

by:Two Eight     2019-07-26
Capital costs are key risk indicators for investment and financial decisions by professional investors and corporate finance managers, in other words;This is an indicator of the market's perception of the risk associated with the cash flow of a particular company, and therefore, the provider of debt and equity capital requires a return to compensate for the assumed risk.The two companies we will calculate the weighted average capital cost (WACC) are Tesco Plc and Unilever Plc.WACC's formula is a weighted average of equity costs and debt costs for both companies.
The cost of debt is obtained by dividing the after-tax financial costs of Tesco Plc for the year ended February 28, 2009 and Uniliver Plc for the year ended December 31, 2008 (taken from their annual report ), calculated according to the average outstanding debts of the current year.Cost of equity of the company = risk-free rate of return of the company Beta * (expected market rate of return-The 10-year yield on British government bonds is seen as an agent for risk-free yields.Currently, it is 4.5% p.a.Beta is a measure of system risk associated with company I.
e.
It shows the relative movement of the stock price of a particular company relative to the benchmark index, which we consider to be FTSE 100.According to our calculation, we use the Beta of Tesco Plc as 0.79 and Unilever are 0.Reuters and Google Finance, respectively.For our computing purposes, we can approximate the expected market yield to the inverse of the price-earnings ratio of the wider market.
2009 the third quarter the FTSE 100 index of P/E ratio for 16.6 times.Thus, the return on the market will reach 100/16.6= 6.02%.Tesco Plc (as of 28 years ).02.26.Initial loan (01.03.Final loan (28.02.After-tax financial costs are subject to pre-tax costs * (1-Effective tax rate ).
26.
3.
4.
0.
6.
Expected market returnRisk-free return d = [c-1.5.We now calculate the relative ratio of debt to equity in the company's capital structure.Book value of debt (28.02.48.Book value of equity (28.02.51.100.Finally, we calculated the WACC of the Tesco Plc and the result was 4.
3.
48.
1.
5.
51.
2.
4.
Therefore, the weighted average capital cost of the Tesco Plc is 4.8%.Unilever (as of 31 years ).12.25.Initial loan (01.01.Final loan (31.12.26.3.4.0.6.Expected market returnRisk-free return d = [c-1.5.Book value of debt (28.02.53.Book value of equity (28.02.47.100.3.53.1.5.47.2.4.Therefore, the weighted average capital cost of Unilever Plc is 4.
6%.
3.
48.
3.
53.
5.
51.
5.
47.
4.
4.
Therefore, we found the WACC (4) of the Tesco Plc.8%) 20 basis points higher than Unilever Plc (4.6%).From the above data, we can easily observe that the after-tax cost of debt of the two companies is significantly lower than the cost of equity.
A) the after-tax cost of Tesco debt is 3.
8% higher than 3.
B) also because Tesco's capital structure is biased towards a costly equity (51.1%) Unilever has only 49% of debt compared to Unilever, and Unilever has more debt (53%), with only 47% relying on equity as a source of funding.References
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