Sector/ Industry Action: Buy or Sell Tech-Software Buy 1. Financials: Analyze the financial performance of your...
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Sector/ Industry Action: Buy or Sell Tech-Software Buy 1. Financials: Analyze the financial performance of your company to determine if management is making good investing and financing decision that would lead to an increase in shareholder wealth. This should include company trends regarding the ratios over the past 10 years and how are they doing relative to the competitors over the 10 years. All these ratios can be found on Morningstar and FINVIZ. I do not expect you to calculate any of these ratios. The only calculation I expect you to do is the DuPont analysis over the last 5 years. For the 10 year trend analysis use the following link to log into Morningstar: www.morningstar.com Key stats at the top of the page. Provide graphs to show 10 year trend for your firm and the competitors. Do not put in tables with rows and columns of numbers. Copy and paste the data in excel and create graphs. i. Liquidity ratios (current) ii. Asset management ratios (inventory turnover, accounts receivables turnover, and total asset turnover) iii. iv. V. vi. Debt ratios (debt/equity and TIE ratio) 1. If D/E ratio is not available then use Total Debt to Total assets ratio 2. TIE ratio is referred to as Interest coverage in Morningstar and it is under profitability ratio Profitability (ROA) Dividend yield (Use Street Insider) FIVE part DuPont analysis (You do not have to compare this to the industry). Show your calculations for the past 3 years. Discuss the factors that contributed to the increase or decrease of ROE over the past three years. Show these calculations in an excel sheet or in a table format within the paper ROE = Tax Burden X Interest Burden X Operating Margin X ATA X Leverage ratio Tax Burden = 1 - Tax rate % (This is under key ratios under profitability tab) Interest Burden = Pretax income / Total operating profit/loss (Income statement) Operating Margin = Total Operating Profit/loss / Revenue (This is under key ratios under profitability tab) ATA = Revenue / Average total assets (This is under key ratios under Efficiency ratios tab) Leverage Ratio = Average total assets / Average total Equity (This is under key ratios under profitability tab) | vii. Based on the financials data that you have collected do you feel the firm management is making good investing and financing decisions that would lead to increase in shareholder value. Explain, simple yes or no is not sufficient. Make sure you discuss which ratios indicate good/poor investing and financing decisions. 2. After completing your analysis do you believe you should buy this stock? If you recommend a buy complete part A. If you do not recommend a buy complete part B. DO NOT DO A WRITE UP FOR PART A and B. You are either recommending this stock is good or bad investment. a. Would you advise a client to buy? If yes, then specify whether it is a market order, limit buy, or buy on margin. i. If you choose market order - explain why you believe the current price is a fair price to buy at? b. Assume your client owns this stock, would you advise them to sell? If yes, then specify whether it is a market order, limit sell, or short. i. If you choose market order explain why you believe the current price is a fair price to sell at. ii. If you choose limit sell - Specify the price you would sell at and why you think that is a good price. iii. If you choose short then assume you are shorting 100 shares and you must pledge 50% margin. Explain how high the price can rise before you get a margin call if your maintenance margin requirement is 30%. Determine what your stop buy price should be and why. Work Cited - Zero tolerance for plagiarism. Cite all your sources in text and provide a reference page. Equity Analysis - Part C COMMON STOCK ANALYSIS CITE YOUR SOURCES AND PARAPHRASE OR YOU WILL RECEIVE A ZERO FOR PLAGIARISM. I have zero tolerance for plagiarism!!! What is considered plagiarizing? Copying and pasting without proper citation. Copying and pasting large sections of the paper from other sources even if it is properly sourced. You are expected to paraphrase. Papers with similarity reports of higher than 15% will be docked 10 points, and if the similarity report exceeds 25% it is an automatic D. Papers with similarity reports higher than 30% will be reported for plagiarism. You are working on the same stock as you worked on in Equity Analysis Part A SALESFORCE CRM 207.862B 1D 5D 1M 6M YTD 1Y 5Y Max Full screen Nov 10, 23.00 1.17 133.52 1.60 Nov 30, 2023 N/A (6.73%) 253.33 213.63 166.67 80.00 3.90M N/A Dec 1, 18 Jun 1, 21 Trade prices are not sourced from all markets 240.47 Company Name, Symbol Current Price: Average Target Price: Average Return CRM 203..91 2,980.851 13.082 Sector/ Industry Action: Buy or Sell Tech-Software Buy 1. Financials: Analyze the financial performance of your company to determine if management is making good investing and financing decision that would lead to an increase in shareholder wealth. This should include company trends regarding the ratios over the past 10 years and how are they doing relative to the competitors over the 10 years. All these ratios can be found on Morningstar and FINVIZ. I do not expect you to calculate any of these ratios. The only calculation I expect you to do is the DuPont analysis over the last 5 years. For the 10 year trend analysis use the following link to log into Morningstar: www.morningstar.com Key stats at the top of the page. Provide graphs to show 10 year trend for your firm and the competitors. Do not put in tables with rows and columns of numbers. Copy and paste the data in excel and create graphs. i. Liquidity ratios (current) ii. Asset management ratios (inventory turnover, accounts receivables turnover, and total asset turnover) iii. iv. V. vi. Debt ratios (debt/equity and TIE ratio) 1. If D/E ratio is not available then use Total Debt to Total assets ratio 2. TIE ratio is referred to as Interest coverage in Morningstar and it is under profitability ratio Profitability (ROA) Dividend yield (Use Street Insider) FIVE part DuPont analysis (You do not have to compare this to the industry). Show your calculations for the past 3 years. Discuss the factors that contributed to the increase or decrease of ROE over the past three years. Show these calculations in an excel sheet or in a table format within the paper ROE = Tax Burden X Interest Burden X Operating Margin X ATA X Leverage ratio Tax Burden = 1 - Tax rate % (This is under key ratios under profitability tab) Interest Burden = Pretax income / Total operating profit/loss (Income statement) Operating Margin = Total Operating Profit/loss / Revenue (This is under key ratios under profitability tab) ATA = Revenue / Average total assets (This is under key ratios under Efficiency ratios tab) Leverage Ratio = Average total assets / Average total Equity (This is under key ratios under profitability tab) | vii. Based on the financials data that you have collected do you feel the firm management is making good investing and financing decisions that would lead to increase in shareholder value. Explain, simple yes or no is not sufficient. Make sure you discuss which ratios indicate good/poor investing and financing decisions. 2. After completing your analysis do you believe you should buy this stock? If you recommend a buy complete part A. If you do not recommend a buy complete part B. DO NOT DO A WRITE UP FOR PART A and B. You are either recommending this stock is good or bad investment. a. Would you advise a client to buy? If yes, then specify whether it is a market order, limit buy, or buy on margin. i. If you choose market order - explain why you believe the current price is a fair price to buy at? b. Assume your client owns this stock, would you advise them to sell? If yes, then specify whether it is a market order, limit sell, or short. i. If you choose market order explain why you believe the current price is a fair price to sell at. ii. If you choose limit sell - Specify the price you would sell at and why you think that is a good price. iii. If you choose short then assume you are shorting 100 shares and you must pledge 50% margin. Explain how high the price can rise before you get a margin call if your maintenance margin requirement is 30%. Determine what your stop buy price should be and why. Work Cited - Zero tolerance for plagiarism. Cite all your sources in text and provide a reference page. Equity Analysis - Part C COMMON STOCK ANALYSIS CITE YOUR SOURCES AND PARAPHRASE OR YOU WILL RECEIVE A ZERO FOR PLAGIARISM. I have zero tolerance for plagiarism!!! What is considered plagiarizing? Copying and pasting without proper citation. Copying and pasting large sections of the paper from other sources even if it is properly sourced. You are expected to paraphrase. Papers with similarity reports of higher than 15% will be docked 10 points, and if the similarity report exceeds 25% it is an automatic D. Papers with similarity reports higher than 30% will be reported for plagiarism. You are working on the same stock as you worked on in Equity Analysis Part A SALESFORCE CRM 207.862B 1D 5D 1M 6M YTD 1Y 5Y Max Full screen Nov 10, 23.00 1.17 133.52 1.60 Nov 30, 2023 N/A (6.73%) 253.33 213.63 166.67 80.00 3.90M N/A Dec 1, 18 Jun 1, 21 Trade prices are not sourced from all markets 240.47 Company Name, Symbol Current Price: Average Target Price: Average Return CRM 203..91 2,980.851 13.082
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