Using the company that you selected for Assignment #1- Examining Financial Statements you will be conducting an
Question:
Note: Please read the documents related to investor analysis under Documents & Resources in Week 7. Additionally, search online for information regarding investor/investment analysis. Some suggested websites are: Investopedia, Yahoo! Finance, MSN MOney, and The Wall Street Journal. Other reputable websites can also be used. [Don’t skip this step! It will provide background context and insight into what you’ll be doing for this assignment.] You will notice that there are many methods to performing an analysis from the perspective of an investor. Some are quantitative while others are qualitative. A mix of the two are used for an effective analysis. There is no one exact way to perform this type of analysis. The analysis you will be performing for this assignment is considered as a type of ‘fundamental’ analysis.
Introduction
Briefly describe each company. Discuss the similarities and differences among the companies. Your discussion should include relative size (revenues, employees, markets, etc.) , diversity of operations, markets in which they operate, and strategic focus. Any other talking points that are stressed by analysts should also be mentioned. Also state your personal objective as a potential investor. For example, are you looking for high growth potential? High dividend payout? Ethical investment? Etc.…. Explain.
Ratios
The ratios you will be analyzing for all 3 companies are as follows:
- Earnings per share (EPS)
- Price- earnings ratio (P/E)
- Dividend Payout
- Dividend Yield
- Leverage ratio
- Gross Margin
- Net Profit Margin
- ROA
- ROE
- In this section, define AND discuss all NINE ratios. What information does each ratio give? Explain why investors would be interested in these particular ratios. You may need to research online for additional resources related to the selected ratios (include references).
- You will also need to show the ratios for ALL 3 companies. This means that you will provide a chart with a total of 27 ratios, nine for each company. Ratios can either be calculated using their financial statements and stock price information, or you can find the selected ratios on the MSN Money website. [https://www.msn.com/en-us/money ] Scroll down and enter your company into the Quote Search Box.
Display the ratios in a chart as follows
Ratio | Company 1 | Company 2 | Company 3 |
- Provide a brief analysis of each company based on the ratio results. Be specific. Highlight similarities and differences. For instance, the ratios cover the topics of shareholder value, investor risk, operating profitability and efficiency. Be sure to address all of these issues in your analysis.
Investment Selection and Additional Information
Research and Discuss recent news articles about the companies that may be helpful in providing additional information about the health of the companies. (Read between the lines. Often times, articles won’t directly say how the news may affect the health of a company. You have to speculate how it may affect the company. For example, a news article reports the recall of a product. This could negatively affect sales and impact various ratios. An article might talk about a company opening new stores. This requires significant investments, may require debt financing, and this would impact various ratios as well. Furthermore, expansion could mean increased revenue, etc.) Select one article for each company that you consider to be the most significant current issue facing the company at this time (or in recent history).
Based on your ratio analysis and additional research of the companies, state which company you would invest in and why. (You can only choose one!)
Additional Instructions
- The document should include the same headings listed above (Introduction etc.).
- The document should be APA formatted (including title page, APA formatted references, etc.)
- Make sure your references include direct links to where you got ALL ratios. Each ratio must be accounted for in your references.
Expert Answer:
Investor Analysis McKesson Introduction McKesson Corporation is an American company that distributes ... View the full answer
