WEB EXERCISE

IBM has had an uneven performance over the years and one way to check this out is to look at the financial information. Go to:finance.yalioo.com.: In the search bar type its ticker symbol IBM and click enter, then follow the steps listed here.

Using the stock chart, look at the $1$ Year, $5$ year, and Max price performance. How has IBM's stock been doing recently and over the longer term?

Click on Statistics on the summary line and look at the $\frac{P}{E}$ ratio over the six periods presented. See how the $\frac{P}{E}$ has changed over time and also note that there are two price earnings ratios presented: a Trailing $\frac{P}{E}$ and a Forward $\frac{P}{E}.$ The forward $\frac{P}{E}$ is the current price over the expected earnings per share for the next $12$ months. How stable have these price$-$earnings ratios been?

Scroll down the page to the bottom and find Dividends & Splits. Compare the trailing

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annual dividend yield to the $5$ year average dividend yield. The payout ratio is given below the $5-$year average. How does this affect the yield and is this payout ratio sustainable?

Assuming IBM's historical long$-$term debt$/$equity is $100$ percent, how does it currently stand? You will find this under the Balance Sheet items. Generally speaking, is that good or bad?

Assuming its historical return on assets is $10$ percent, how does it currently stand? You will find this under Management Effectiveness. Generally speaking, is the return on assets good or bad?

Looking at Management Effectiveness, why is the return on equity so much higher than the return on assets?

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