Overview
This week's assignment asks you to interpret your findings from the data collected in the Company Analysis and Stock Analysis. You will select one of the three companies you gathered financials for to develop a brief presentation for shareholders. SEE attachments for information.
Instructions
You will develop a shareholders' presentation for the selected company.
- Create a PowerPoint presentation that includes 6 – 8 PowerPoint slides.
- When creating a PowerPoint presentation, you want to catch the audience's attention by using interesting backgrounds, charts, and graphs, or other graphics to present the information.
- Create talking points for your presentation by adding notes to each slide and comparing the companies' ratios. Use the notes to provide the narration of each slide because the notes will appear in the teleprompter. Use short bullet points on the slides and complete sentences in the notes.
- Now that you’re almost done with your detailed analysis consider what to present to the board of directors to evaluate the quality of their investment in the company. Put together a video presentation to highlight the company’s performance and to motivate investors to continue to invest in the company.
The presentation will include the following financial information:
- Provide a brief company overview and presentation to the board of directors that includes the company name, business structure, and location.
- Include a short summary (no more than one slide) of the following information:
- The ownership and management team.
- Company history.
- Mission statement.
- Product/service.
- Target market/customer.
- Include a short summary (no more than one slide) of the following information:
- Discuss the company's recent financial performance from the ratio analysis.
- Describe the company's competition and the company's performance relative to competitors.
- Discuss any identified problems and recommend solutions.
- Discuss how the company's capital mix affects its stock performance.
- Discuss the company's strategy, market opportunities, and future outlook.
- Present a recommendation to the board of directors on whether investors should invest more in the company or not.
Company Analysis
| FIN534: Financial Management Name: Sara Pilgrim Professor Name: Dr. Ingrid P Nelson Date: 11/17/2024 | |||
| Company Analysis | |||
| U.S. Stock exchange: Company Name: Apple Computer, Inc. | Company 1: Intel Corporation | Company 2 : Microsoft Corporation | |
| Determine the free cash flow for the last two most recent years for the two companies. | 2022: 11.5 Billion 2023: 11.9 Billion | 2022: 59.61 Billion 2023: 67.44 Billion | |
| Explain how a company’s free cash flow (cash flow from operating activities minus capital expenditures) impacts its growth potential. | See attached work document | ||
| Instructions: Find the numbers for these calculations from the income statement or balance sheet for each company from the annual report or 10-K. Make sure the numbers are not from the 10-Q or quarterly report as you want to make apples to apples comparisons. | |||
| Your Name: | Sara Pilgrim | ||
| Industry: | Technology | ||
| Company 1 Name: | Apple Computer, Inc. | ||
| Company 2 Name: | Intel Corporation | ||
| Company 3 Name: | Microsoft Corporation | ||
| Income Statement Information | |||
| Total Revenue | |||
| Apple Computer, Inc. | $383,285.00 | ||
| Intel Corporation | $54,228 | ||
| Microsoft Corporation | $211,915.00 | ||
| Gross Profit | |||
| Apple Computer, Inc. | $169,148.00 | ||
| Intel Corporation | $21,711.00 | ||
| Microsoft Corporation | $146,052.00 | ||
| Net Income | |||
| Apple Computer, Inc. | $96,995.00 | Note: Choose Net Income or EBITDA. Generally accepted accounting principles (GAAP) only requires the use of Net Income and EBITDA is optional. Foreign companies generally do not follow GAAP and use EBITDA because it normally makes the numbers look better. | |
| Intel Corporation | $1,675.00 | ||
| Microsoft Corporation | $72,361.00 | ||
| EBITDA | |||
| Apple Computer, Inc. | $125,820.00 | ||
| Intel Corporation | $9,695.00 | ||
| Microsoft Corporation | $102,384.00 | ||
| Balance Sheet Information | |||
| Total Assets | |||
| Apple Computer, Inc. | $352,583.00 | ||
| Intel Corporation | $191,572.00 | ||
| Microsoft Corporation | $411,976.00 | ||
| Total Liabilities | |||
| Apple Computer, Inc. | $290,437.00 | ||
| Intel Corporation | $81,607.00 | ||
| Microsoft Corporation | $205,753.00 | ||
| Total Stockholders' Equity | |||
| Apple Computer, Inc. | $62,146.00 | ||
| Intel Corporation | $109,965.00 | ||
| Microsoft Corporation | $206,223.00 | ||
| Ratios Calculations | |||
| Calculate the Following Ratios: | |||
| Debt to Equity Ratio Formula (Total Debt/Total Equity) | Total Debt | Total Equity | Debt to Equity Ratio |
| Apple Computer, Inc. | $290,437.00 | $62,146.00 | 4.67 |
| Intel Corporation | $81,607.00 | $109,965.00 | 0.74 |
| Microsoft Corporation | $205,753.00 | $206,223.00 | 1.00 |
| Gross Margin Formula (Gross Profits/Sales) | Gross Profits | Sales | Gross Margin |
| Apple Computer, Inc. | $169,148.00 | $383,285.00 | 44% |
| Intel Corporation | $21,711.00 | $54,228.00 | 40% |
| Microsoft Corporation | $146,052.00 | $211,915.00 | 69% |
| Operating Margin Formula (Operating Income/Sales) | Operating Income | Sales | Operating Margin |
| Apple Computer, Inc. | $114,301.00 | $383,285.00 | 0.30 |
| Intel Corporation | $11,471.00 | $54,228.00 | 0.21 |
| Microsoft Corporation | $88,523.00 | $211,915.00 | 0.42 |
| Find the appropriate amounts from the 10K annual report and insert them into the formula to calculate. | |||
| Formulas | Apple Computer, Inc | Intel Corporation | Microsoft Corporation |
| Profitability ratios: | |||
| Profit margin = Net Income/Sales | 0.25 | 0.03 | 0.34 |
| Return on equity = Net Income/Shareholders' Equity | 1.56 | 0.02 | 0.35 |
| Efficiency ratios: | |||
| Inventory turnover = Cost of Goods Sold/Average Inventory | 33.82 | 2.92 | 53.03 |
| Accounts receivable turnover = Net Sales/Average Accounts Receivable | 12.99 | 74.18 | -51.85 |
| Leverage ratios: | |||
| Debt to equity ratio = Total Liabilities/Shareholders' Equity | 4.673 | 0.742 | 0.998 |
| Debt/Assets = Total Liabilities/Total Assets | 0.824 | 0.426 | 0.499 |
| Liquidity ratios: | |||
| Current ratio = Current Assets/Current Liabilities | 0.988 | 1.542 | 1.769 |
| Quick ratio = (Current Assets – Inventory)/Current Liabilities | 0.785 | 1.516 | 1.808 |
| Discuss three takeaways or an analysis of what you’ve learned about each company based on their financial data. Include at least one paragraph for each company. | |||
| Analysis | |||
| Apple Computer, Inc | Apple has demonstrated satisfactory profitability and reasonable operating efficiency. The above-industry average return on equity and profit margins indicate that Apple has a strong ability to generate actual profits from sales in addition to generating high returns for shareholders. Still, debt financing makes up a large portion of its funding methods, which can lead to problems if not managed well. At the same time, Apple still has a comparatively high inventory turnover, which proves the company’s efficient management of inventory. A low liquidity ratio could mean that the company will have difficulty paying off short-term debt without using more funds. | ||
| Intel Corporation | During the fiscal years analyzed, Intel showed only average profitability and efficiency compared to companies in its industry, which suggests that it has had some difficulty in converting sales into profits and becoming attractive to investors. However, Intel can succeed in this segment if it has a solid current ratio, and the fact that Intel has a strong current ratio means that the company is able to meet its short-term obligations without any stress. Leverage is a very conservative approach and a lower debt equivalent ratio indicates a lower financial risk. Intel also has a very low account Accounts receivable turnover is a fundamental reflection of good collection practices and efficient credit management. | ||
| Microsoft Corporation | Microsoft's profit and cost-sales efficiency are relatively high. The high total Croissance Risqué – Return on Equity and Profit Margin demonstrates how proficiently Microsoft turns its sales into profit and returns worth to shareholders. A moderate debt-to-equity ratio indicates that the company is paying proper attention in using debt, which is actually very important. but at the same time has not over relied on them to finance its activities. Further, the rigidity of turnover ratio indicates good liquidity ratios as Microsoft has the ability to meet its short-term obligations. This food chain’s high inventory turnover ratio means that has an efficiency in its manner of handling inventories. |
Stock Analysis
| Stock Analysis | ||
| Instructions: Find the numbers for these calculations from the income statement or balance sheet for each company from the annual report or 10-K. Make sure the numbers are not from the 10-Q or quarterly report as you want to make apples to apples comparisons. | ||
| Your Name: | Sara Pilgrim | |
| 0 | Technology | |
| Apple Computer, Inc. | NASDAQ | |
| Intel Corporation | NASDAQ | |
| Microsoft Corporation | NASDAQ | |
| Stock | ||
| Ticker Symbol | ||
| Apple Computer, Inc. | AAPL | |
| Intel Corporation | INTC | |
| Microsoft Corporation | MSFT | |
| Stock Price Include the stock price at the balance sheet date. (Stock prices fluctuate daily and are available in the Wall Street Journal) | ||
| Fiscal Year End Date: | 12/31/23 | |
| Apple Computer, Inc. | $191.59 | |
| Intel Corporation | $50.00 | |
| Microsoft Corporation | $311.06 | |
| Market Cap Formula (Share Price/Number of Shares) | ||
| Apple Computer, Inc. | $2,911,930.00 | |
| Intel Corporation | $112,010.00 | |
| Microsoft Corporation | $3,100,880.00 | |
| Price to Earnings Ratio Formula (Share Price/EPS) | ||
| Apple Computer, Inc. | 26.52 | |
| Intel Corporation | 60.88 | |
| Microsoft Corporation | 42.87 | |
| Current Dividend Yield – Year End Formula (DPS/Share Price) | ||
| Apple Computer, Inc. | 0.58% | |
| Intel Corporation | 2.13% | |
| Microsoft Corporation | 0.72% | |
| Discuss the performance of the stocks, how the company's performance impacts the stock performance, and their investment potential. Include at least one paragraph for each company. You can consult the notes to the financial statements that appear right after the financial statements to find a detailed explanation or you can use Management's Discussion and Analysis in the Annual (10K) Report. | ||
| Analysis | ||
| Apple Computers, Inc | Apple's market confidence remains apparent and shows significant room for expansion. The firm dedicates all its profits to research and development, ensuring it remains at the forefront of the tech sector. Apple has consistently drawn in investors by emphasizing consistent, long-term growth, as the dividend yield is relatively low, indicating that investors are primarily interested in the rise in the company's stock price. | |
| Intel Corporation | Because of the anticipated heightened danger, the substantial dividends offer this company an appeal to investors aiming to put their money into high-yield equities. While it's still developing, Intel could potentially see better results moving forward, contingent upon the volatility of the market; it's considered somewhat secure yet also carries a degree of risk. | |
| Microsoft Corporation | Microsoft remains a stable and well-known investment option, showing strong indications of market leadership and potential for expansion. This approach of leveraging technology and expanding its range of services provides investors with assurance in the company's success. The present dividend yield, or the yield from dividends, is relatively small, but it also adds to the investment's worth, making Microsoft a versatile investment choice. |
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Company Analysis
| FIN534: Financial Management Name: Sara Pilgrim Professor Name: Professor Dr. Ingrid Nelson Date: 10/18/2024 | |||
| Company Analysis | |||
| U.S. Stock exchange: Company Name: | Company 1: Amazon (AMZN) : | Company 2 : Apple (AAPL): | |
| Determine the free cash flow for the last two most recent years for the two companies. | 1.Free Cash Flow (2023) = $84.946 billion – $52.729 billion = $32.217 billion 2.Free Cash Flow (2022) = $46.752 billion – $63.645 billion = -16.893 billion (negative FCF) | Free Cash Flow (2023) = $110,543 – $10,959 = $99,584 million Free Cash Flow (2022) = $122,151 – $10,708 = $111,443 million | |
| Explain how a company’s free cash flow (cash flow from operating activities minus capital expenditures) impacts its growth potential. | Since it shows the cash left over after capital and operational expenses are deducted, free cash flow (FCF) is a crucial indicator of a company's financial health. This leftover money can be put to a lot of different uses and is a key factor in assessing a company's potential for expansion. | The ability of a business to grow is largely dependent on its free cash flow (FCF), which offers the capital required for expansion, innovation, and investments in new goods without the need for outside funding. Strong financial cash flow (FCF) allows a business to take advantage of opportunities, weather setbacks, and pay off debt. | |
| Instructions: Find the numbers for these calculations from the income statement or balance sheet for each company from the annual report or 10-K. Make sure the numbers are not from the 10-Q or quarterly report as you want to make apples to apples comparisons. | |||
| Your Name: | Sara Pilgrim | ||
| Industry: | Technology and e-commerce | ||
| Company 1 Name: | Amazon.com, Inc | ||
| Company 2 Name: | Apple Inc., | ||
| Company 3 Name: | Microsoft Corporation (MSFT). | ||
| Income Statement Information | |||
| Total Revenue | |||
| Company 1 Name: Amazon.com, Inc | $574.78 billion | ||
| Company 2 Name: Apple Inc., | $383.29 billion | ||
| Company 3 Name: Microsoft Corporation (MSFT) | $212.03 billion | ||
| Gross Profit | |||
| Company 1 Name:Amazon.com, Inc. (AMZN | $93.805 billion | ||
| Company 2 Name:Apple Inc. (AAPL) | $169.148 billion | ||
| Company 3 Name:Microsoft Corporation (MSFT) | $149.35 billion | ||
| Net Income | |||
| Company 1 Name:Amazon.com, Inc. (AMZN | $30.425 billion | Note: Choose Net Income or EBITDA. Generally accepted accounting principles (GAAP) only requires the use of Net Income and EBITDA is optional. Foreign companies generally do not follow GAAP and use EBITDA because it normally makes the numbers look better. | |
| Company 2 Name:Apple Inc. (AAPL) | $96.995 billion | ||
| Company 3 Name:Microsoft Corporation (MSFT | $72.36 billion | ||
| EBITDA | |||
| Company 1 Name:Amazon.com, Inc. (AMZN | $21.62 billion | ||
| Company 2 Name:Apple Inc. (AAPL) | $113.74 billion | ||
| Company 3 Name:Microsoft Corporation (MSFT | $89.93 billion | ||
| Balance Sheet Information | |||
| Total Assets | |||
| Company 1 Name:Amazon.com, Inc. (AMZN | $527.854 billion | ||
| Company 2 Name:Apple Inc. (AAPL) | $352.583 billion | ||
| Company 3 Name:Microsoft Corporation (MSFT | $411.98 billion | ||
| Total Liabilities | |||
| Company 1 Name:Amazon.com, Inc. (AMZN | $325.979 billion | ||
| Company 2 Name:Apple Inc. (AAPL) | $290.437 billion | ||
| Company 3 Name:Microsoft Corporation (MSFT | $205.75 billion | ||
| Total Stockholders' Equity | |||
| Company 1 Name:Amazon.com, Inc. (AMZN | $201.875 billion | ||
| Company 2 Name:Apple Inc. (AAPL) | $62.146 billion | ||
| Company 3 Name:Microsoft Corporation (MSFT | $206.22 billion | ||
| Ratios Calculations | |||
| Calculate the Following Ratios: | |||
| Debt to Equity Ratio Formula (Total Debt/Total Equity) | Total Debt | Total Equity | Debt to Equity Ratio |
| Company 1 Name:Amazon.com, Inc. (AMZN | $325.979 billion | $201.875 billion | 1.61 |
| Company 2 Name:Apple Inc. (AAPL) | $111.088 billion | $62.146 billion | 1.79 |
| Company 3 Name:Microsoft Corporation (MSFT | $47.24 billion | $206.22 billion | 0.23 |
| Gross Margin Formula (Gross Profits/Sales) | Gross Profits | Sales | Gross Margin |
| Company 1 Name:Amazon.com, Inc. (AMZN | 93.805 billion | $574.78 billion | 16.32% |
| Company 2 Name:Apple Inc. (AAPL | $169.148 billion | $383.29 billion | 44.13% |
| Company 3 Name:Microsoft Corporation (MSFT | $149.35 billion | $212.03 billion | 70.44% |
| Operating Margin Formula (Operating Income/Sales) | Operating Income | Sales | Operating Margin |
| Company 1 Name:Amazon.com, Inc. (AMZN | $36.852 billion | $574.78 billion | $49.47 |
| Company 2 Name:Apple Inc. (AAPL): | $114.301 billion | $383.29billion | 29.82% |
| Company 3 Name:Microsoft Corporation (MSFT | $83.59 billion | $212.03 billion | 39.42% |
| Find the appropriate amounts from the 10K annual report and insert them into the formula to calculate. | |||
| Formulas | Company A | Company B | Company C |
| Profitability ratios: | Amazon.com, Inc. (AMZN | Apple Inc. (AAPL | Microsoft Corporation (MSFT |
| Profit margin = Net Income/Sales | 5.29% | 25.30% | 34.13% |
| Current ratio = Current Assets/Current Liabilities | 105.00% | 99.00% | 177.00% |
| Efficiency ratios: | |||
| Inventory turnover = Cost of Goods Sold/Average Inventory | 14.2 | 37.97 | 20.09 |
| Accounts receivable turnover = Net Sales/Average Accounts Receivable | 12.15 | 13.29 | 4.56 |
| Leverage ratios: | |||
| Debt to equity ratio = Total Liabilities/Shareholders' Equity | 1.61 | 4.67 | 0.998 |
| Debt/Assets = Total Liabilities/Total Assets | 0.617:1 | 0.82 | 4:48 |
| Liquidity ratios: | |||
| Current ratio = Current Assets/Current Liabilities | 1.05 | 0.99 | 1.77 |
| Quick ratio = (Current Assets – Inventory)/Current Liabilities | 0.843 | 0.94 | 1.75 |
| Discuss three takeaways or an analysis of what you’ve learned about each company based on their financial data. Include at least one paragraph for each company. | |||
| Analysis | |||
| Company 1 Name:Amazon.com, Inc. (AMZN | Amazon's financial statistics for 2023 shows that despite $574.78 billion in revenue and $93.805 billion in gross profit, the corporation is still a global leader. Driven by its broad business operations, which include e-commerce and Amazon Web Services (AWS), Amazon maintains a healthy profit margin of 5.29% despite operating in a capital-intensive market. With $32.217 billion in free cash flow, the corporation demonstrates its capacity to produce large sums of money, which enable it to fund development and reinvestment plans. But with a quick ratio of 0.843 and a debt-to-assets ratio of 0.617, Amazon is somewhat dependent on debt and might run into problems with liquidity when inventory is taken out. In general, Amazon has strong finances and strikes a balance between expansion initiatives and operational effectiveness, setting it up for long-term success. | ||
| Company 2 Name:Apple Inc. (AAPL) | Apple Inc.'s 2023 financial results show good operational efficiency and profitability. With $383.29 billion in revenue and a $169.148 billion profit, Apple was able to retain a strong 44.13% gross margin. The business's high earnings generation and efficient cost control are demonstrated by its operating margin of 29.82% and profit margin of 25.30%. Apple's high debt to equity ratio of 4.67 implies significant leverage, even while its current ratio of 0.99 and quick ratio of 0.94 demonstrate near-parity between current assets and liabilities. However, Apple's effective operations—which include a turnover of accounts receivable of 13.29 and inventory of 37.97—indicate that the business is well-positioned for future expansion and stability. | ||
| Company 3 Name:Microsoft Corporation (MSFT | With total sales rising from $212.03 billion in 2023 to $245.12 billion in 2024—a 15.6% growth rate—and a gross margin of 69.77%, Microsoft has shown to be a financially strong company. The operating margin increased to 44.64% as the operating income increased from $83.59 billion to $109.43 billion, demonstrating efficient cost control and operational effectiveness. Both the current and quick ratios are still above the acceptable standard, indicating that Microsoft can still satisfy its obligations, even though they have reduced, signaling a larger reliance on inventory for short-term liabilities. Additionally, there was an improvement in the debt-to-equity ratio, which went from 0.998 to 0.908, indicating a healthier balance sheet and less dependence on debt. All things considered, Microsoft's strong financial standing sets it up for future expansion and market flexibility. |
Stock Analysis
| Stock Analysis | ||
| Instructions: Find the numbers for these calculations from the income statement or balance sheet for each company from the annual report or 10-K. Make sure the numbers are not from the 10-Q or quarterly report as you want to make apples to apples comparisons. | ||
| Your Name: | ||
| Industry: | Technology and Ecommerce | |
| Company 1 Name: | ||
| Company 2 Name: | ||
| Company 3 Name: | ||
| Stock | ||
| Ticker Symbol | ||
| Company 1 Name: | AMZN | |
| Company 2 Name: | AAPL | |
| Company 3 Name: | MSFT | |
| Stock Price Include the stock price at the balance sheet date. (Stock prices fluctuate daily and are available in the Wall Street Journal) | ||
| Fiscal Year End Date: | ||
| Company 1 Name:(as of Oct 16, 2024) | $186.89 billion | |
| Company 2 Name:(as of Oct 16, 2024 | $221.69 billion | |
| Company 3 Name:(as of Oct 16, 2024) | $412.02 billion | |
| Market Cap Formula (Share Price/Number of Shares) | ||
| Company 1 Name:Amazon.com Inc. (AMZN) | $1.95 trillion | |
| Company 2 Name:Apple, Inc. (AAPL) | $3.51 trillion | |
| Company 3 Name:Microsoft Corporation (MSFT) | $3.11 trillion | |
| Price to Earnings Ratio Formula (Share Price/EPS) | ||
| Company 1 Name:Amazon.com Inc. (AMZN) | 135.22 | |
| Company 2 Name:Aplple, Inc. (AAPL) | 36.61 | |
| Company 3 Name:Microsoft Corporation (MSFT) | 42.94 | |
| Current Dividend Yield – Year End Formula (DPS/Share Price) | ||
| Company 1 Name:Amazon.com. (AMZN) | 0.00% | Amazon does not pay dividends. |
| Company 2 Name (AAPL): | $0.41 | |
| Company 3 Name(MSFT): | $0.65 | |
| Discuss the performance of the stocks, how the company's performance impacts the stock performance, and their investment potential. Include at least one paragraph for each company. You can consult the notes to the financial statements that appear right after the financial statements to find a detailed explanation or you can use Management's Discussion and Analysis in the Annual (10K) Report. | ||
| Analysis | ||
| Amazon.com, Inc. (AMZN): | Amazon's stock performance has been closely tied to its financial growth and strategic initiatives. Over the past few years, Amazon’s stock has experienced fluctuations driven by the company’s expansive investments in logistics, technology (AWS), and new growth areas like advertising. The company's total revenue of $574.78 billion and a strong free cash flow of $32.217 billion in 2023 show Amazon’s ability to generate massive revenue while maintaining positive cash flow, which helps support investor confidence. However, relatively low profit margins (5.29%) and a moderate debt-to-assets ratio of 0.617 suggest that Amazon operates in a capital-intensive business, which could introduce risk during periods of economic downturn or higher interest rates. | |
| Apple Inc. (AAPL): | Apple Inc.’s stock performance is closely tied to its strong financial results, driven by robust revenue growth, high profitability, and efficient operations. The company’s consistent innovation, such as new product releases, sustains investor confidence, contributing to stock price appreciation. Apple’s ability to generate significant free cash flow and maintain attractive margins enhances its appeal, despite high leverage. Additionally, Apple’s commitment to returning value to shareholders through dividends and stock buybacks strengthens its investment potential. While risks such as competition and global uncertainties exist, Apple’s strong market position and financial stability make it a solid long-term investment option. | |
| Microsoft Corporation (MSFT): | Microsoft's stock performance has benefitted from strong financial results and strategic innovations, with revenue growing from $212.03 billion in 2023 to $245.12 billion in 2024, boosting investor confidence. The company's focus on cloud computing and AI, including partnerships with OpenAI to enhance its Azure services, positions it for long-term growth amid increasing demand for digital transformation. Additionally, Microsoft's solid balance sheet, characterized by improving debt-to-equity ratios and consistent cash flow, supports its resilience in a volatile market, making it a strong investment option for stability and growth in the tech sector |
