Reference no: EM131371531
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.
Health care delivery system to improve the quality
: Reforming our health care delivery system to improve the quality and value of care is essential to address the increasing costs, poor quality, and increasing numbers of Americans without insurance. Our healthcare system is based on a system which cur..
|
Develop a profile of each of leaders using leadership theory
: Develop a profile of each of the leaders using the leadership theories studied in class and those found through external research. What type of leaders were they?
|
What were the major breakthroughs that contributed
: What were the major breakthroughs that contributed to a more scientific understanding of disease causation?
|
What is the msbetween
: A total of 75 subjects, divided equally into three groups, yields a total sum of squares = 324.61 and a within sum of squares= 293.50. What is the MSBETWEEN?
|
Calculate the current net operating profit after-taxes
: 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..
|
Which is twice the percent ethanol by volume
: The concentration of ethanol in hard liquor is given as degrees proof, which is twice the percent ethanol by volume. What are the mole fraction and molality of C2H5OH in 70 degrees rum?
|
Explain the role so called accidental discoveries played
: Explain the role so called "accidental" discoveries played in the history of science. Describe the major experiments and scientists involved in the discovery of DNA as our hereditary material and its structure.
|
Provides a detailed discussion of warehouse health
: MGT496:Chapter 7 provides a detailed discussion of warehouse health and safety risks. These include risks associated with layout, floors, heating, noise, housekeeping and fire. Review these risks, and in a two- to three-page paper (not including t..
|
Make a solution with a colligative molality
: How many grams of MgSO4 (mM= 120 g/mol) must be added to 147 grams of water to make a solution with a colligative molality of 0.250 m?
|