Assignment 4-2

Assignment 4-2

Short Term & Long Term Liabilities

I have chosen Symantec Corporation. Symantec Corporation Symantec is the largest maker of security software, and the seventh largest software company in the world.[2] Symantec Corporation was founded in 1982 by Gary Hendrix with a National Science Foundation grant. Symantec was originally focused on artificial intelligence-related projects, including a database program. Hendrix hired several Stanford University natural language processing researchers as the company's first employees. In 1984 Symantec was acquired by another, even smaller computer software startup company, C&E Software, founded by Denis Coleman and Gordon Eubanks and headed by Eubanks. The merged company retained the name Symantec, and Eubanks became its chief executive officer. Its first product, Q&A, was released in 1985. Q&A provided database management and bundled a word processor.

Short Term Liabilities

From the recent income statement, following are the company's short term liabilities:

Trade payables1,728,000

Other payables508,000

Accruals & deferred income252,000

Trade & other payables2,488,000

B shares liability-

Borrowings154,000

Derivative financial instruments56,000

Taxes payable202,000

Provisions19,000

Current liabilities2,919,000

Long Term Liabilities

Other payables92,000

Secured loans-

Obligations under finance leases-

Borrowings2,177,000

Derivative financial instruments8,000

Deferred income tax liability95,000

Provisions57,000 Retirement benefit obligations309,000

Non-current liabilities2,738,000

B) Equity

Debt Ratio= Total Liabilities Total Liabilities + Equity

5,657,000

5,657,000 + 4,376,000

= 0.56383933

Debt to Equity Ratio= Total Liabilities

Total Equity

= 5,657,000

4,376,000

= 1.29273309

Debt Ratio=Short Term Liabilities

Short Term Liabilities+ Equity

=2,919,000

2,919,000+4,376,000

=0.515997879

Debt to Equity Ratio= Short Term Liabilities

Equity

= 2,919,000

4,376,000

=0.667047532

Debt Ratio= Long Term Liabilities

Long Term Liabilities+ Equity

=2,738,000

2,738,000+ 4,376,000

=0.384874895

Debt to Equity Ratio= Long Term Liabilities

Equity

=2,738,000

4,376,000

= 0.625686

Recommendations

The debt-equity ratio is another leverage ratio that compares a company's total liabilities to its total shareholders' equity. This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. To a large degree, the debt-equity ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. Similar to the debt ratio, a lower the percentage means that a company is using less leverage and has a stronger equity position. The Debt to Equity Ratio measures how much money a company should safely be able to borrow over long periods of time. It does this by comparing the company's total debt (including short term and long term obligations) and dividing it by the amount of owner's equity .For now; you only need to know that the number can be found at the bottom of the balance sheet. You'll actually calculate the debt to equity ratio in segment two when we look at real balance sheets.)

The result you get after dividing debt by equity is the percentage of the company that is indebted (or "leveraged"). The normal level of debt to equity has changed over time, and depends on both economic factors and society's general feeling towards credit. Generally, any company that has a debt to equity ratio of over 40 to 50% should be looked at more carefully to make sure there are no ...