- 58 -
added.) However, elsewhere in his report he indicated that 11.70
percent is the average debt-equity ratio of four named firms.
These four firms had debt-equity ratios ranging from 0.8
percent to 33.6 as of June 30, 1996. We are not given any
information that would lead us to conclude that the average of
four firms’ widely disparate capital structures happens to be
precisely equal to “the typical firm’s” capital structure.
All four firms are publicly traded, while petitioner is not.
We do not find any information suggesting that this makes a
difference or does not make a difference in what a reasonable
independent investor would do with a firm like petitioner.
Hakala told us that “each of the four firms is a large
manufacturer of * * * [mobile] homes with a large retail
organization.” Petitioner is entirely a retailer.
Hakala told us that the four firms had sales of $208 million
to $862 million a year for 1995 and 1996, while petitioner’s
sales were only $9-10 million.
Hakala described the four firms as “billion dollar
companies”, while he regarded petitioner as worth only a few
million dollars.
Hakala did not present to us any explanation (much less
evidence supporting any explanation) as to whether or not
adjustments should be made to this particular four-firm average
debt-equity ratio to arrive at a typical debt-equity ratio that
Page: Previous 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 NextLast modified: May 25, 2011