Research 2 Investment
As an investor you need to calculate the main ratios..
o Internal liquidity ratios::
C urrent ratio..
o Operating performance::
Operating efficien cy ratios:: total asset turnover..
o Operating profitability ratios::
Gross profit margin,,
O perating profit margin,,
N et profit margin,,
R eturn on total capital,, (RROE)) .
o Risk analysis
Business risk::
T ype of industry..
T he variability of the firm’s operating income over time (ssales variability,, and operating leverage)) .
o Financial risk
Uncertainty of acquirin g debt,, the acceptable level of financial risk for a firm depends on its business risk .
Debt ratios:: debt – equity ratio,, long – term debt//ttotal capital ratio,, total debt ratio .
Interest coverage Cash flow coverage ratio,, cash flow – long term debt ratio,, cash flo w//ttotal debt ratio .
o External liquidity risk (ddeterminants of market liquidity))
Comparing the market data with the companies ‘ data .
As an investor,, you have to decide the possibility to invest in these companies and explaining the reasoning of your decision..
o Summary
Of the main and relevant issues found from the da ta .
o Investment decision
Considering the data,, investme nt theories do you recommend to invest in these companies individually or as a portfolio .
o Comparison between theory and practices in investment..
The most relevant aspects of your project . Identify the most issue that you considered important in considering to invest in the sample companies..
Identify a practice or a theory to support your discussion .