The next step for Dr. Bueller is to help him compare stocks and to make good investment decisions. With that in mind, you want to compare Industrial Company #1 with its top rival, Industrial Company #2, and explain to Dr. Bueller which would make a better investment.

In preparation for sharing your thoughts with Dr. Bueller, go to the Small Group Discussion Board, and divide the following calculations evenly among group members. Each group member will be responsible for submitting his or her assigned calculations.

• Operating income margin
• Net income margin
• Current ratio
• Earnings per share
• Price-to-earnings (P/E) ratio

Industrial Company #1
(in millions)	2008	2009	2010
Sales	$4,250	$4,500	$4,750
Operating Income	$400	$445	$480
Net Income	$200	$225	$250
Current Assets	$2,500	$2,750	$2,850
Current Liabilities	$2,300	$2,450	$2,500
Shares Outstanding	100	100	100
Average Stock Price	$32	$39	$50

Industrial Company #2
(in millions)	2008	2009	2010
Sales	$3,350	$3,750	$4,250
Operating Income	$335	$395	$470
Net Income	$168	$198	$240
Current Assets	$1,750	$1,900	$2,100
Current Liabilities	$1,350	$1,400	$1,500
Shares Outstanding	80	80	80
Av Stock Price	$38	$46	$62

	2010 Industry Avg.
Operating Margin	10.50%
Net Margin	5.50%
Current Ratio	1.25
Earnings/Share	$2.75
PE Ratio	20.0

Group Project Guidelines

• As a group, perform the calculations of the following values for both Industrial Company #1 and Industrial Company #2 using the information from the data tables located in the Assignment Description (Calculations must be divided evenly among group members):
  • Operating income margin
  • Net income margin
  • Current ratio
  • Earnings per share
  • Price-to-earnings (P/E) ratio
• Each group member must organize their calculations in an Excel spreadsheet and submit it to the Small Group Discussion Board at least 48 hours before the Group Project due date.
• Respond to each group member's Small Group Discussion Board topic and complete the following:
  • Compare his or her calculations for both Industrial Company #1 and Industrial Company #2
  • Compare the company calculation values to the industry averages
  • In your own words, explain the significance of each calculation
• Each group member will then write 34 pages (body of paper), in a Word document, about which company is a better investment.
• Post a new topic to the Small Group Discussion Board that contains your Word document.