Sign In
Not register? Register Now!
Essay Available:
Pages:
2 pages/≈550 words
Sources:
2 Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Other (Not Listed)
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 10.53
Topic:

Letter to the Investor: Investment Recommendation on Purchase of Apple Stocks

Other (Not Listed) Instructions:

An investor has approached you about whether purchasing stock in the company would be a wise investment. Using your financial analysis of one of the approved companies, you will send a letter to the investor summarizing your findings and explaining whether or not you recommend a stock purchase at this time. Refer to the "Annual Reports for Approved Companies," located in the Class Resources. You will use information in the Form 10-K to complete this assignment. Using the correct formulas and a separate tab for each analysis, calculate the following ratios using Microsoft Excel:
Three liquidity ratios for the past 2 years
Three solvency ratios for the past 2 years
Three profitability ratios for the past 2 years
In addition, use the list of approved companies within the same industry to conduct research about a competitor company. Using IBIS World or another applicable resource, locate three ratios for the competitor company. Compare your company to the competitor company and indicate the differences in the ratios for the two organizations. Next, locate the same three ratios for the industry. Compare your company to the industry average and discuss how well it is performing compared to the industry. Note: you are not required to calculate the ratios for this portion of the assignment, but proper citations are required for the ratios used in the comparison. Justify your analysis by explaining your findings.
Using your research findings and analysis of company performance in relation to industry competitors, construct a 500- to 750-word letter making stock purchase recommendations for a potential investor. In the letter, address the following, referencing specific ratios and comparative numbers as appropriate:
Discuss the overall financial performance of your company in relation to the specific competitor.
Discuss whether the company performed better or worse than the industry average, providing specific numbers and an explanation of what the numbers illustrate. For this portion of the memo, consider the 21 questions in Chapter 6 of the textbook to explain what the ratio results tell the user of the financial statements about the health of the company. Instead of providing calculations or showing numerical comparison(s), describe the performance of the company and use the ratio results to support your points.
Recommend whether the potential investor should purchase stock in your company and justify your recommendation based on your research and analysis of the company ratios and industry competition.
Submit the Excel file that contains your ratios and the Word file letter to the digital classroom.
While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA

Other (Not Listed) Sample Content Preview:

Letter to an Investor
Student’s Name
Affiliation
Course
Professor
Due Date
Letter to an Investor
Dear Sir/Madam,
RE: Investment Recommendation on Purchase of Apple Stocks
An analysis of liquidity, solvency, and profitability ratios indicates that purchasing a stock in Apple is advisable. Comparisons with a key competitor and the industry average show that Apple is efficiently managed and can generate returns for you as an investor.
Microsoft Corporation is a key competition for Apple. In terms of profitability, Apple Inc. performed significantly better than Microsoft in terms of the return on equity and the return on assets. However, Microsoft reports a higher gross margin than Apple, which could be explained by the differences in product mix. In terms of solvency, Microsoft had better solvency than Apple (Macrotrends, 2022) and is better equipped to meet its long-term obligation. On the other hand, Apple had higher liquidity than Microsoft. Thus, Apple generates more cash than Microsoft placing it in a position where it can effectively cover its short-term obligations without raising external capital.
Apple belongs in the Industrial and Commercial Machinery and Computer Equipment industry. In terms of liquidity, Apple reported a quick ratio of 1.02 in 2021, which was lower than the industry average of 1.24 (ReadyRatio, 2022). Though the ratio indicates that Apple can meet its short-term obligation using its liquid asset, it is lower than the industry average. Nonetheless, the difference is not significant as a quick ratio higher than one indicates that Apple can offset its current liabilities if needed. Apple had a cash ratio of 0.49 in 2021 (Apple, 2022), which was also slightly lower than the industry average of 0.59. Notably, Apple may need to improve its cash holding to meet the industry average. The company has a current ratio of 1.075 in 2021, which was significantly lower than the average current ratio of the industry (1.98) (ReadyRatio, 2022). Compared to other companies in the industry, Apple has a higher risk of default. Nonetheless, the company’s current ratio is still acceptable given that it is above one.
In terms of solvency, Apple had a debt ratio ...
Updated on
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:
Order

👀 Other Visitors are Viewing These APA Other (Not Listed) Samples: