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Assignment Description

The next step for Dr. Bueller is to help him compare stocks and make good investment decisions. With that in mind, you want to compare Industrial Company #1 with its top rival Industrial Company #2 and explain to Dr. Bueller which one would make a better investment.

In preparation for sharing your thoughts with Dr. Bueller, go to the Small Group Discussion Board and divide the following calculations evenly among group members. Each group member will be responsible for submitting his or her assigned calculations.

Operating income margin

Net income margin

Current ratio

Earnings per share

Price-to-earnings (P/E) ratio.

Industrial Company #1
(in millions)	2008	2009	2010
Sales	$4,250	$4,500	$4,750
Operating Income	$400	$445	$480
Net Income	$200	$225	$250

Current Assets	$2,500	$2,750	$2,850
Current Liabilities	$2,300	$2,450	$2,500

Shares Outstanding	100	100	100
Average Stock Price	$32	$39	$50

Industrial Company #2
(in millions)	2008	2009	2010
Sales	$3,350	$3,750	$4,250
Operating Income	$335	$395	$470
Net Income	$168	$198	$240

Current Assets	$1,750	$1,900	$2,100
Current Liabilities	$1,350	$1,400	$1,500

Shares Outstanding	80	80	80
Av Stock Price	$38	$46	$62

	2010 Industry Avg.
Operating Margin	10.50%
Net Margin	5.50%
Current Ratio	1.25
Earnings/Share	$2.75
PE Ratio	20.0

Group Project Guidelines

As a group, perform the calculations of the following values for both Industrial Company #1 and Industrial Company #2 using the information from the data tables located in the Assignment Description:

Operating income margin

Net income margin

Current ratio

Earnings per share

Price-to-earnings (P/E) ratio.

Calculations must be divided evenly among group members.

Each group member must organize their calculations in an Excel spreadsheet and submit it to the Small Group Discussion Board at least 48 hours before the Group Project due date.

Respond to each group member's Small Group Discussion Board topic and

Compare his or her calculations for both Industrial Company #1 and Industrial Company #2.

Compare the company calculation values to the industry averages.

In your own words, explain the significance of each calculation.

Each group member will then write 3–4 pages (body of paper), in a Word document, about which company is a better investment.

Post a new topic to the Small Group Discussion Board that contains your Word document.

Grading

You will be graded on the accuracy of your calculations, your demonstrated understanding of the listed financial values, the quality of your Small Group Discussion Board posts, and your ability to effectively compare and explain which company is the better investment.

Please add your file.

Your assignment will be graded in accordance with the following criteria. Click here to view the grading rubric.