Reference no: EM131304417
Company description:
Novartis (NOVN VX) operating in the global pharmaceutical industry headquartered in Switzerland and publically traded on several international exchanges. The following tables contain the relevant data required to solve the following problems related to solving and commenting on the firm's cost of capital, current position of economics value added, as well as your assessment of the firm's payout policy and capital investment policy.
Moody's Levels
|
Moody's Current Yields
|
|
Country
|
Marginal Corp Tax Rate
|
AAA
|
3.780%
|
|
Switzerland
|
25%
|
AA
|
4.076%
|
|
United Kingdom
|
20%
|
A
|
4.374%
|
|
United States
|
25%
|
Baa
|
4.670%
|
|
|
|
Sources: Moody's, Federal Reserve Bank, Bloomberg
Ticker
|
Total Debt / EBITDA
|
Net Debt / EBITDA
|
12M IVol
|
S&P Rating
|
Moody's Rating
|
Fitch Rating
|
1Yr Default Risk
|
MRK US
|
2.16
|
1.05
|
25.1
|
AA
|
A2
|
A+
|
0.0149%
|
NOVN VX
|
1.28
|
0.41
|
22.5
|
AA-
|
Aa3
|
AA
|
0.0058%
|
PFE US
|
1.86
|
0.18
|
21.2
|
AA
|
A1
|
A+
|
0.0100%
|
BMY US
|
2.21
|
-1.13
|
27.8
|
A+
|
A2
|
A-
|
0.0122%
|
JNJ US
|
0.61
|
-0.71
|
21.2
|
AAA
|
Aaa
|
AAA
|
0.0028%
|
GSK LN
|
2.32
|
1.78
|
20.8
|
A+
|
A2
|
A+
|
0.0191%
|
Source: Bloomberg
Ticker
|
Total Assets
(Billions)
|
Price
|
Shares Outstanding
(Billions)
|
Mkt. Value Debt (Billions)
|
Revenue
(Billions)
|
EBIT
(Billions)
|
Net Income
(Billions)
|
MRK US
|
$105.1
|
$58.25
|
2.171
|
$18.56
|
23.850
|
6.439
|
7.808
|
NOVN VX
|
125.4chf
|
103.01chf
|
2.728
|
13.79chf
|
41.459chf
|
9.439chf
|
8.195chf
|
PFE US
|
$172.1
|
$34.14
|
7.210
|
$31.67
|
48.296
|
17.056
|
8.104
|
BMY US
|
$33.7
|
$60.00
|
1.966
|
$7.24
|
17.715
|
3.566
|
5.247
|
JNJ US
|
$131.1
|
$100.43
|
2.899
|
$15.12
|
63.747
|
16.169
|
12.949
|
GSK LN
|
40.7gbp
|
23.91
|
5.755
|
15.84gbp
|
24.352gbp
|
7.884gbp
|
4.602gbp
|
Sources: Bloomberg
Ticker
|
Short Term Beta
|
Long Term Beta
|
Current Risk Free Rate
|
Long Term Risk Free Rate
|
Current Expected Market Return
|
Long Term Expected Market Return
|
|
MRK US
|
0.74
|
0.56
|
1.34%
|
5.8%
|
12.4%
|
10.4%
|
|
NOVN VX
|
1.02
|
0.77
|
0.09%
|
4.3%
|
8.52%
|
7.1%
|
|
PFE US
|
1.00
|
0.82
|
1.34%
|
5.8%
|
12.4%
|
10.4%
|
|
BMY US
|
0.91
|
0.54
|
1.34%
|
5.8%
|
12.4%
|
10.4%
|
|
JNJ US
|
0.90
|
0.70
|
1.34%
|
5.8%
|
12.4%
|
10.4%
|
|
GSK LN
|
0.86
|
1.04
|
1.76%
|
4.9%
|
10.66%
|
10.2%
|
|
Sources: Bloomberg, Dimson Marsh and Staunton (2002) Triumph of the Optimists, Princeton University Press.
Ticker
|
Revenue Growth
|
Dividends TTM/Share
|
5yr Average CAPEX
(Billions)
|
5yr Asset Growth
|
5yr Dividend Growth
|
5yr Average Share Repurchases
|
MRK US
|
-4.08%
|
$1.78
|
$2.04
|
-0.74%
|
1.78%
|
Still need to look these up
|
NOVN VX
|
0.63%
|
2.6chf
|
2.76chf
|
5.28%
|
4.14%
|
|
PFE US
|
-3.84%
|
$1.06
|
$1.22
|
4.35%
|
9.94%
|
|
BMY US
|
-3.08%
|
$3.61
|
$-2.02
|
2.36%
|
3.01%
|
|
JNJ US
|
4.23%
|
$2.80
|
$9.88
|
9.7%
|
7.39%
|
|
GSK LN
|
-13.20%
|
88.8p
|
-2.11gbp
|
3.99%
|
5.57%
|
|
Source: Bloomberg
Your Analysis, Comments and Recommendations:
1. Calculate the long run weighted cost of capital, and comment on its implication for the firm.
2. Calculate the current capital charge, based on existing market value of the firm's debt and equity.
3. Calculate the current Net Operating Profit After-taxes, as well as the Return on Invested Capital, comment on these and distinguish them from the measures of Net Income and ROE.
4. Calculate and discuss the implications of the Economic Value Added and EVA Spread for the prospects of the firm with regard to its payout policy versus its reinvestment plans.
5. Should the firm increase its dividend payout, stock repurchase program, increase its capital investment program? Justify your recommendation.
What is the total sample size?
: What is the total sample size? What is the mean income and mean number of hours worked? What is the correlation coefficient between the outcome and predictor variables? Is it significant? How would you describe the strength and direction of the relat..
|
Derive the expression of plastic strain increment
: For the combined isotropic/kinematic hardening model, derive the expression of plastic strain increment from the plastic consistency condition.
|
Describe database backup and planning
: Describe Database Backup and Planning.compare and contrast Database Backup & Disaster Planning.
|
What is the difference between hedging and speculating
: What is the difference between hedging and speculating? Give an example of speculating using commodity futures and speculating using financial futures.
|
Calculate the current capital charge
: Calculate the current capital charge, based on existing market value of the firm's debt and equity. Calculate the current Net Operating Profit After-taxes, as well as the Return on Invested Capital, comment on these and distinguish them from the me..
|
Describe ultimate goal of the product campaign for shampoo
: Describe the ultimate goal of the product campaign for the new shampoo. Discuss your methods for achieving this goal. Identify the components of marketing, pricing, and distribution for the campaign.
|
Plot the stress strain curve by changing the applied forces
: An elastoplastic bar is clamped at the left end, and variable loads are applied at the right end, as shown in the table. Plot the stress-strain curve by changing the applied forces by 5 kN increments.
|
What counterparty risk is involved with forward contracts
: What is counterparty risk? What counterparty risk is involved with forward contracts? Why are investors and firms that enter forward contracts willing to accept counterparty risk?
|
Give the answer of muliple choice question
: INFA 610:Give the Answer of Muliple Choice Question.Due to a history of abuse against setuid root programs, major Linux distributions no longer ship with unnecessary setuid-root programs. But for them.
|