Preview

Stock Leverage Analysis Paper

Satisfactory Essays
Open Document
Open Document
482 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Stock Leverage Analysis Paper
Stock Prise analysis.
HP, IBM and Apple are rivals competing in the PC industry. Three of the companies are extremely similar in that they both go for the strategy of providing low prices. The comparison of these two companies in the areas of liquidity, solvency, and profitability based on each of their annual financial reports ending in October 2014 show the following:

Fig: 6 month stock price of HP
According to Google Finance, IBM’s stock price is at $164.64, earning per share $11.52, total debt to assets 25.23 and expecting to be growing more. When we analyse these ratios we realize that HP is trailing behind IBM. Though HP has more current assets when compared to IBM, it equally has greater claims for the assets, thus bringing down the ratios as …show more content…
Inventory turnover ratio measures the number of times average inventory was sold during a period of time.

Fig : 6 month stock price of APPLE
The activity ratios are basically the cash conversion capacity of a company. The cash is the king, and the two important assets that determine this are receivables and inventories. Hence shorter the cycle better the cash position. So when we analyze the inventory ratios of both companies, we realize that though HP has appreciable sales revenue, the cost for it is more thus reducing the inventory turnover when compared to IBM. Added to this we can also see that HP working capital is blocked for more days in inventory when compared to IBM. References:

HPQ Stock Quote - HP Inc. Stock Price Today (HPQ:NYSE) - MarketWatch. (March). Retrieved from HYPERLINK "http://www.marketwatch.com/investing/stock/hpq"
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    fin 341
    • 363 Words
    • 2 Pages

    fin 341

    Inventory turnover ratios show the number of times a company’s inventory is “turned over” in a year. KR’s turnover ratio is 18.80 where as WFM has an inventory ratio of 31.28, which show that KR seems to have a better…

    • 363 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Fnt Task 1
    • 1124 Words
    • 3 Pages

    Fnt Task 1

    Next,” inventory turnover ratio” measures the number of times a company sells its inventory during a year. A high rate of turnover indicates ease in selling inventory; a low rate indicates difficulty. It’s calculated by cost of goods divided by average inventory. In 2011, the inventory turnover was 6.1. By 2012 the ratio decreased to 5.2. The decrease may be due to a slow ability to turnover merchandise in sales and paying a higher cost for goods. This is considered to be a major weakness rating in the lower third quartile group compared to industry’s…

    • 1124 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    IBM Case
    • 1385 Words
    • 36 Pages

    IBM Case

    1. Decompose IBM’s ROE (by quarter) and discuss the factors (and trends) that contribute to…

    • 1385 Words
    • 36 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Financial Leverage Analysis of Walmart, Costco and Target
    • 783 Words
    • 4 Pages

    Financial Leverage Analysis of Walmart, Costco and Target

    Typical nonfinancial firms have debt ratios at or below 50%. Each of these three companies has debt ratios above this mark, with Target having the highest at over 65%. This is surprising given the enormous success of these companies. A large portion of each company’s debt lies within their accounts payable, meaning that these companies owe large amounts of money to their suppliers. This is not surprising though due to the quick inventory turnover that is common in this service sector. For all three companies, the accounts payable and inventory figures are similar, so one can assume that a majority of their inventories have not been paid for. Another reason that a company might have a high debt ratio is to thwart a takeover, something that seems highly unlikely in the case of these three companies.…

    • 783 Words
    • 4 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Delta Airlines Activity Ratios
    • 83 Words
    • 1 Page

    Delta Airlines Activity Ratios

    Activity ratio: Delta did well on their days in inventory compare to the other competitors because all four-years has a lower ratio. Having fewer days of inventory is better, it gives the investors an idea how long it takes a company to turn its inventory into sales. Comparing with Delta’s competitors, Southwest and American airlines have higher ratio which means it takes longer for them to turn their inventory into sales. United Airlines comes under Delta of having fewer days of inventory.…

    • 83 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Good Essays

    Wealth Comparison Financial Analysis
    • 748 Words
    • 3 Pages

    Wealth Comparison Financial Analysis

    To compare two competing companies in a certain industry many financial ratios can be used in order to determine which stock is a better buy or if the company being looked at is performing better than the peers. This paper will compare GE and Tyco to determine which one has been performing at a higher level than the other.…

    • 748 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    The Financial Detective
    • 3723 Words
    • 15 Pages

    The Financial Detective

    The structured exploration of pairs of companies within an industry affords a number of important insights into strategy and financial performance. First, the economics of individual industries account for significant variations in financial ratios because of differences in technologies, product characteristics, or competitive structures. Second, financial performance results from managerial choices: within industries, the wide variation in financial ratios is often a result of the differences in corporate strategy in marketing, operations, and finance. For those reasons, this case is a good springboard into subsequent classes, which deal with the interaction of strategy and financial performance.…

    • 3723 Words
    • 15 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    The Financial Detective
    • 396 Words
    • 2 Pages

    The Financial Detective

    Books and Music: The first firm is company H and the second firm is company G because company H has more fixed assets and higher inventory, and company G has a higher inventory turnover ratio as seen in the financial data. This is due to company H having retail stores and company G selling solely through its web site.…

    • 396 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Service Industry Analysis - Apple
    • 3106 Words
    • 13 Pages

    Service Industry Analysis - Apple

    Apple and HP are both multinational corporations that are widely known for producing consumer electronics and software. Both companies are considered to be one of the largest companies in their market, and would be considered to be competitors of each other. With the products and services that they offer being similar, they would be ideal companies for a critical analysis against each other. Both companies implement different strategies, with both leading to their success.…

    • 3106 Words
    • 13 Pages
    Powerful Essays
    Read More
  • Best Essays

    Ibm Financial Analysis
    • 3525 Words
    • 15 Pages

    Ibm Financial Analysis

    The purpose of this analysis is to determine whether or not IBM represents a wise investment choice.…

    • 3525 Words
    • 15 Pages
    Best Essays
    Read More
  • Satisfactory Essays

    Apple stock ana
    • 314 Words
    • 2 Pages

    Apple stock ana

    Apple Inc. is a multinational corporation that designs, develops and sells electronics and technology products. The company went public on December 12, 1980, generated one of the biggest amount of capital from IPO in history. At the moment, Apple is the largest publicly traded corporation in the world by market capitalization. The company is driving highest profit out of mobile device industry, and expected to growth strongly in the future. After the launch of its new iPhone 5c recently, Apple’s stock price significantly dropped, as investors worry about the expensiveness of this new smartphone, but it has quickly recovered after that. Over the past 10 years, EPS increased steadily, reached the peak of $44.20 per share in 2012. Past 5 years EPS grew stably at annually average of 62.20% which is the highest out of 20 stocks from our stock screener. Apple’s projected growth is high but seems to be humble compared to its past performance, at 17.77%. ROE analysis and Margin analysis, especially net profit margin, also show good signal which increased steadily over the 10-year-period. Apple’s stock currently trades at quite high price of around $500 per share, but the PEG ratio shows at 0.68 indicating that the stock is relatively cheap at its growth level. Despite of being a growth stock, the company is offering dividend payout of 27.30%. Overall, the stock has outperformed its industry average in all of the growth indicators. The high potential risks, including highly competitive industry require high capital expenditures to stay innovative; product manufacturing and logistical services provided by outsourcing partners; and legal risk related to intellectual property rights, should be acknowledged by investors. We decided to pick Apple since it has very strong exposure into the mobile device sector with high growth potential, strong cash flows, strong competitive position, and a cheap stock right now.…

    • 314 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Prophet Mohammed
    • 764 Words
    • 4 Pages

    Prophet Mohammed

    There is an adversarial relationship between Supply chain partners as well as a dysfunctional industry practices such as a reliance on price promotion.…

    • 764 Words
    • 4 Pages
    Powerful Essays
    Read More
  • Good Essays

    Zara Case Study
    • 1027 Words
    • 5 Pages

    Zara Case Study

    1. With which international competitor listed in the case is it most useful to compare Inditex’s financial performance? What do comparisons indicate about Inditex’s operating economics? Why?…

    • 1027 Words
    • 5 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    What Is 4.5 Turnover Ratio
    • 776 Words
    • 4 Pages

    What Is 4.5 Turnover Ratio

    Turnover ratio help in knowing how well the company manages it resources. If the company manages its resources well, the larger will be its sales and thus helps in making larger profits. Thus it depends on the company how well it converts the assets to sales which can be determined through this ratio.…

    • 776 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Learning Reflection
    • 1431 Words
    • 4 Pages

    Learning Reflection

    For our corporate financial management the lecturer gave us a group course work in which we were asked to analyse how M/s. Apple Inc., is performing in terms of…

    • 1431 Words
    • 4 Pages
    Satisfactory Essays
    Read More

Related Topics