You are given with the following information statements of a public firm Bambie in the airline industry concurrently. (Notice that all negative numbers are parenthesized). The firm has issued 12 million shares of common stock with current market price as $45/per share, the expected dividend is $4.90/per share with 3.5% growth rate, 300,000 shares of preferred stocks with promised preferred dividend and preferred stock price as $2.20/per share and $22.5/per share, respectively. The firm also has currently, 2 million 3.6%-coupon bonds with $1,000 face value that pays the coupons semi-annually. The current bond price is $735/per bond. The bonds are expected to mature in 2020. A) If using the market prices for assessment on rates of return, what is the rate of return the common stock of Bambie? What is the rate of return for their preferred stocks?
B) What is the bond’s yield to maturity of the firm’s corporate bond?
C) Suppose you are also given with the following financial statements of Bambie for the past three years. What are the historical returns on equity for this company for the past three years? Is the firm Bambie doing well from the perspectives of shareholders? Why or why not?
D) Is this firm well-diversified with their arrangement of capital? That is, are they well diversified with different sources of capital?
E) Based on the given information, provide your ratios analyses. Apply the Du-Pont model and interpret your results for the firm’s performance.
F) Provide the common size statements for both Balance Sheet and Income Statement. What kind of noticeable pattern you may identify for the firm? Is this usual for the airline industry?
Balance Sheet (in millions)

2014 2015 2016
Assets
Cash 30 10 473
Marketable securities 100 100 0
Accounts Receivable 920 150 800
Inventory 710 178 450
Plant, Building, and
Equipment’s (net) 872 1802 1209
Investments in affiliates 0 30 329
Total Assets 2632 2270 3261
Liabilities
Short-term debts 107 9 30
Advances from
customers 111 34 134
Accounts payable 85 192 771
Interest payable 75 98 62
Tax payable 127 147 128
Other Accrued
Expenses 20 15 35
Bonds payable 925 486 750
Stockholders' Equity
Common stock 1021 1055 1175
Additional paid-in
capital 74 156 47
Retained earning 87 78 129
Total liabilities and
equities 2632 2270 3261
Income Statement(in millions)

2014 2015 2016
Net Sales 3296 3418 3983
Cost of Goods Sold 2115 1979 2510
Selling and General Expenses 700 812 759
Depreciation Expense 160 298 284
Interest Expense 90 109 121
Income Tax Expense 195 137 254
Net Income 36 83 55