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Capital Structure for Goodyear, Campbell Soup & Hewlett Packard

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Consider three companies: Goodyear, Campbell Soup, and Hewlett Packard. Reflect on the nature of the business of these three companies.

Upon reviewing the nature of the operations of the companies including the nature of their customers and products, what would you recommend should the capital structure (total liabilities or debt and equity proportions) be for each of the three companies?

Note that you are not asked to provide specific numbers, just 'low debt ratio', 'medium debt ratio' or 'high debt ratio'. (Do not quote the actual company's capital structure or their debt-to-equity ratios as per their balance sheet).

Explain your recommendations for each of these three companies. Consider the nature of their business, the riskiness of the company, and the advantages and disadvantages of debt over equity financing in your answers.

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The solution discusses capital structure for Goodyear, Campbell Soup and Hewlett Packard.

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Approaches to Estimate the value of brands:

There are four main approaches that can be utilized to estimate the value of brands in an organization. These methods include the economic approach, the income approach, the cost approach and the market approach. The economic approach is also known as the earning valuation approach in some companies. This method estimates the value of the brand through comparing the potential of earning the company can get from the assets and how this will impact the valuation of the company. The valuation of the company is normally based on the free flow of cash from assets in the future (Rodrigues, 2006).

The income approach is the method that analyses the amount of returns intangible assets of a company yields. Here, the method estimates the amount of returns that the assets will yield in the future and when the organization ...

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