Cash flow analysis: The company has performed well in terms of operating cash flows because the operational cash flows are $3,408.6 million which have been used for investing and financing activities...

Construct the corporation's capital structure as measured by market value for equity and book value for debt. Compared to the leading competitor, should management use more or less leverage to enhance stockholder returns? Explain why you chose your suggested capital structure (after comparing to the competitor). Submit as attachments the financial statements used for this assignment.

Cash flow analysis: The company has performed well in terms of operating cash flows because the operational cash flows are $3,408.6 million which have been used for investing and financing activities as well during the year. The company has made repayment of long-term loan $1204.7 million, purchase of treasury stock $2,446.3 million which have been financed from operating cash flows and shows positive operational performance and capacity to generate cash for the organization. The company has a net income of $2,030.4 million and the net operating cash generated is 43,408.6 million which shows that the company has efficiently managed its working capital (The Sherwin – Williams Company, 2021). The major movement in operating cash is due to non-cash expenses such as the depreciation of $268 million, amortization of $313.4 million, an increase in accounts payable by $227.2 million, etc. Further, the net operating cash has also been increased from the previous year by approx 47% which is also a healthy indicator for the organization. Under investing activities, the company has invested $322.4 million during the year which has been financed from operating cash and shows the positive performance of the company. The company has invested into capital assets $303.8 million which shows that the company is also expanding its business and managing its cash flows entirely from operations. There is also an increase in other investments by $79.3 million which shows that the company is parking its idle funds into other non-current assets as well which shows the efficiency of the organization to manage long-term and capital assets (The Sherwin – Williams Company, 2021). The company has also sold unused assets for $60.7 million which is also showing timely realization of proceeds from unused assets. Under financing activities, the company has paid $3,020.1 million which is entirely financed from operating cash. The major item is repayment or purchase of treasury stock which shows that the company is capitalizing its market value and providing an opportunity to shareholders to realize their gain by selling shares to the company itself. Further, the company has paid a cash dividend of $488.0 million which shows that the company is also providing a handsome amount of cash profit as a dividend which is also entirely paid from operating cash (The Sherwin – Williams Company, 2021). The company has also raised $999.0 million from the long- term which has been set off against repayment of loans and in totality, the company is reducing its debt which is also a positive indicator and shows the efficiency of the company to manage long-term solvency efficiently. Thus, the overall cash flow movement or management of the company has shown a positive trend and the company has managed its operating, financing, and investing cash flows in an efficient manner during the year 2020. Reference: TheSherwin–WilliamsCompany(2021).AnnualReport,2020.Availableat https://www.sec.gov/ix?doc=/Archives/edgar/data/89800/000008980021000010/shw- 20201231.htm