This assignment is based on previous assignment complete. I have attached the file.
1. Please use your six companies in the previous "Financial Ratios"to list the stock prices of June 1 and July1,2020.Use above info to compute stock return for individual stock (1%,listing the computation).
2.Collect Beta coefficient for each stock and explain the risk (high,low or close to the average)(2%)
3.Conclude your portfolio investments in these six stocks and the risk and returns.(1%)
The six selected companies are: 1. Apple Inc 2. Microsoft Corp 3. Wal-Mart Inc 4. Chevron Inc 5. Johnson & Johnson 6. Delta Airlines AAPL MSFT WMT CVX JNJ DAL Current ratio 1.5 2.9 0.77 1.01 1.31 0.53 Debt Equity ratio 1.4 0.65 1.11 0.22 0.45 1.61 Assets turnover 0.18 0.12 0.57 0.13 0.5 0.73 Profit margin 21.35% 33.36% 2.81% 2.86% 20.75% 7.76% Price to Earnings ratio 26.04 31.35 23.04 49.75 22.88 6.88 Market price to Book value 18.88 12.47 5.03 1.34 6.31 1.65 Closing stock price (1st Jun 2020) 333.46 188.36 121.24 103.24 146.77 36.97 The current ratio of MSFT is .9 followed by AAPL (1.5) and JNJ (1.31). DAL has lowest value at 0.53. Therefore, the liquidity position of Microsoft Co is highest followed by Apple Inc. However, liquidity of Chevron Inc and Johnson & Johnson is also good as the current ratios are higher than 1.0 but Delta airlines need to improve its liquidity because of very low Current ratio. The debt equity ratio of Delta Airlines is highest at 1.61 followed by Apple Inc (1.4) and Walmart (1.11). Chevron Inc and Johnson & Johnson, both have debt equity ratios lower than 1.0. The standard Debt equity ratio should be 2:1 and here, all the companies have lower than Standard value. It is better as the risk of insolvency is low. Assets turnover of all the companies are quit low. Delta Airlines has Asset turnover ratio of 0.73, maximum among them followed by Johnson & Johnson (0.50). The standard value of Asset turnover should be more than 1.0 and therefore, all ix companies need to improve the asset management. The profit margin of Microsoft is highest at 33.36% followed by Apple Inc at 21.35%. Chevron Inc has lowest profit margin of 2.86%. Hence, Chevron Inc, Walmart Inc and Delta Airlines need to improve their profitability positions. Price to Earnings ratio of Chevron Inc is highest at 49.75 followed by Microsoft Inc (31.35) and Apple Inc (26.04). High price earnings ratio shows the stocks are overpriced and thus Investors need to wait a while to come down the price. In the same way, market price to book value represents the stock price against the book value of share. It reflects the over and under pricing of security. Here, The Apple stock has higher price to book value of 18.88 followed by Microsoft at 12.47. Therefore, one can wait for coming down the price of such stocks for buying. The closing price of stock doesn’t show anything intrinsically. In the combination of earnings or book value, the ratio can be interpreted and conclusion can be made about the investment in security. Here, such ratios like Price earnings ratio and Price to Book values have already discussed above. References: Financial ratios (2019). Apple Inc. Retrieved from: https://www.morningstar.com/stocks/xnas/aapl/financials Financial ratios (2019). Microsoft Inc. Retrieved from: https://www.morningstar.com/stocks/xnas/msft/financials Financial ratios (2019). Walmart Inc. Retrieved from: https://www.morningstar.com/stocks/xnas/wmt/financials Financial ratios (2019). Chevron Inc. Retrieved from: https://www.morningstar.com/stocks/xnys/cvx/quote Financial ratios (2019). Johnson & Johnson. Retrieved from: https://www.morningstar.com/stocks/xnys/jnj/financials Financial ratios (2019). Delta Airlines. Retrieved from: https://www.morningstar.com/stocks/xnys/dal/quote