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This week you will compile all the information for your course project. You will submit a document prepared as a business report. This report will include information from your two companies in the same industry that you have been following throughout this course.
Required:
Prepare a 3-5 page business report that summarizes the information you have researched on your two companies. The report should include the following:
- Name and background information on your two companies.
- Financial statement and ratio analysis on both companies.
- Chart that includes the trend on the companies’ stock prices.
- Indicate which company you feel is the most financially stable. Support your answer with your research.
Stock
Watch
|
Date |
Stock |
Stock Symbol |
Current Price |
Board T raded On |
Financial Facts |
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|
04/15/13 |
Microsoft Corporation |
MSFT |
28.69 |
Nasdaq |
MSFT pays a 0.92 Dividend; current assets have risen each year over past three years; income statements show positive growth over past three years |
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|
AT&T |
T |
37.95 |
NYSE |
T pays a 1.80 Dividend; Balance sheet reflects current assets dropped from 2011 to 2012; Income statements reflect fluctuating amount of profit over past three years, no losses |
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|
Apple, Inc |
AAPL |
419.85 |
AAPL pays a 10.62 Dividend; Balance sheet reflects current assets have risen over the past three years; Income statement shows positive growth over past three years. |
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|
American Eagle Outfitters |
AEO |
19.16 |
AEO pays a 0.44 Dividend; Balance sheet reflects current assets have dropped in the past year; profits have increased on the income statement over the last three years. |
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|
Starbucks Corporation |
SBUX |
57.71 |
SBUX pays a 0.84 Dividend; Balance sheet reflects current assets have risen over the past three years; Income statement reflects that the company has had increased profits over the last three years and has not operated at a loss. |
The three stocks that I would like to choose are:
Microsoft Corporation (MSFT)
Apple, Inc (AAPL)
Starbucks Corporation (SBUX)
The other two investments that I choose are:
Wells Fargo Special CD 58 month term at .60% APY
Wells Fargo Money Market Savings at .03 APY
The Money Market Savings will be the most affected by the interest rates as they change. This is because the rate is adjustable as the interest rates within the economy change.
Most Risky to Least Risky
5. Starbucks
4. Apple
3. Microsoft
2. Money Market Savings
1. Special CD
Starbucks is the most risky because their product is the most likely to be affected by recession economic issues. This can cause their stock price to vary greatly. Apple is number four because they have all of their eggs in one basket per say, if the iPhone or iPad does not continue to do well, the company would be in serious trouble. Microsoft is less risky because they are better diversified than Apple. The Money Market is more secure than any of the stocks but the rate can change which makes it more risky than the guaranteed percentage on the special CD which is the most secure, and best deal.
The three stocks that I would like to choose are:
Microsoft Corporation (MSFT)
Apple, Inc (AAPL)
Starbucks Corporation (SBUX)
The other two investments that I choose are:
Wells Fargo Special CD 58 month term at .60% APY
Wells Fargo Money Market Savings at .03 APY
The Money Market Savings will be the most affected by the interest rates as they change. This is because the rate is adjustable as the interest rates within the economy change.
Most Risky to Least Risky
5. Starbucks
4. Apple
3. Microsoft
2. Money Market Savings
1. Special CD
Starbucks is the most risky because their product is the most likely to be affected by recession economic issues. This can cause their stock price to vary greatly. Apple is number four because they have all of their eggs in one basket per say, if the iPhone or iPad does not continue to do well, the company would be in serious trouble. Microsoft is less risky because they are better diversified than Apple. The Money Market is more secure than any of the stocks but the rate can change which makes it more risky than the guaranteed percentage on the special CD which is the most secure, and best deal.
1. Liquidity Ratios:
Current ratio=current assets/current liabilities
Apple= 57,653,000/ 38,542,000 =1.5
Microsoft= 85,084,000/32,688,000=2.6
-The ratio of current assets to current liabilities is better in Microsoft than in apple.
Quick Ratio=current assets-inventory/current liabilities
Apple= 57,653,000- 791,000 /38,542,000=1.48
Microsoft=85,084,000- 1,137,000 /32,688,000=2.57
-Microsoft has a better quick ratio than apple, i.e its current assets excluding inventory are more in ration than apple.
2. Activity or Asset Utilization Ratios
Receivables turnover=annual credit sales/accounts receivables
Apple= 156,508,000/32,589,000 =4.8
Microsoft=73,723,000/9,653,000=7.6
· Microsoft has a more credit sales than apple
Average collection period=accounts receivables/annual credit sales/365
Apple= 21,275,000/156,508,000/365=0.00037
Microsoft=17,815,000/73,723,000/375=0.00064
-Microsoft collects its receivables for a shorter period than apple.
3. Profitability Ratios
Gross profit margin=sales-cost of sales/sales
Apple= 156,508,000-87,846,000/156,508.000=43.87%
Microsoft=73,723,000-17,530,000 /73,723,000=76.22%
-Apple has a lower cost of sales ratio to sales than Microsoft.
Return on assets=Net income/total assets
Apple= 41,733,000/176,064,000 =0.237
Microsoft=16,978,000 /121,271,000=0.14
Apple’s returns on assets is higher than Microsoft.
Return on equity=Net income/shareholders equity
Apple= 41,733,000/118,210,000 =0.353
Microsoft=16,978,000 /66,363,000=0.02558
The equity return represent the ratio of available funds to the shareholders, Apple shareholders get more funds to assets than Microsoft.
4. Leverage Ratios also called Debt Utilization Ratios
debt-to-equity ratio=total Dedt/Total Equity
Apple= 0
Microsoft= 10,713,000+ 1,231,000 / 66,363,000=18%
Debt Ratio=Total Dedt/total Assets
Apple= 0
Microsoft=10,713,000+ 1,231,000/121,271,000=9.8%
-Apple does not have any debt, hence cannot be compared with Microsoft.
5. Coverage Ratios
Debt coverage ratio=Net operating income/total debt
Apple= 0
Microsoft=16,978,000 /10,713,000+ 1,231,000=1.42
-Apple does not have any debt, hence cannot be compared with Microsoft.
1. Starbucks
2. Apple
3. Microsoft
The 3 companies I picked are up above. Starbucks stocked has gone up, Apple stock has gone down, Mircosoft stock has gone up, Money Market saving stock the reason why some have gone up and some have went down Is because of different product being put out and what people like more of.
|
Date |
Stock |
Stock Symbol |
Stocks Current |
Preferred Stock |
convertible investments |
||||||||||||
|
05/29/13 |
Microsoft Corporation |
MSF T |
34.88 0.14(0.40%) |
No |
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|
AT&T |
T |
35.91 0.27(0.75%) |
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|
Apple, Inc |
AAPL |
444.95 3.51(0.80%) |
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|
American Eagle Outfitters |
AEO |
19.35 0.60(3.01%) |
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|
Starbucks Corporation |
SBUX |
63.63 0.63(0.98% |
In order to have a Convertible Investment you have to have preferred stock and none of the company I am watching have preferred stock.
