move on to the next part of my project

Microsoft Corporation (MSFT)

Apple, Inc (AAPL)

Starbucks Corporation (SBUX)

The other two investments that I choose are:

Wells Fargo Special CD 58 month term at .60% APY

Wells Fargo Money Market Savings at .03 APY

The Money Market Savings will be the most affected by the interest rates as they change. This is because the rate is adjustable as the interest rates within the economy change. 

Most Risky to Least Risky

5. Starbucks

4. Apple

3. Microsoft

2. Money Market Savings

1. Special CD

Starbucks is the most risky because their product is the most likely to be affected by recession economic issues. This can cause their stock price to vary greatly.  Apple is number four because they have all of their eggs in one basket per say, if the iPhone or iPad does not continue to do well, the company would be in serious trouble. Microsoft is less risky because they are better diversified than Apple. The Money Market is more secure than any of the stocks but the rate can change which makes it more risky than the guaranteed percentage on the special CD which is the most secure, and best deal. 

1. Liquidity Ratios:

Current ratio=current assets/current liabilities

Apple= 57,653,000/ 38,542,000 =1.5

Microsoft= 85,084,000/32,688,000=2.6

-The ratio of current assets to current liabilities is better in Microsoft than in apple.

Quick Ratio=current assets-inventory/current liabilities

Apple= 57,653,000- 791,000 /38,542,000=1.48

Microsoft=85,084,000- 1,137,000 /32,688,000=2.57

-Microsoft has a better quick ratio than apple, i.e its current assets excluding inventory are more in ration than apple.

2. Activity or Asset Utilization Ratios

Receivables turnover=annual credit sales/accounts receivables

Apple= 156,508,000/32,589,000 =4.8

Microsoft=73,723,000/9,653,000=7.6

· Microsoft has a more credit sales than apple

Average collection period=accounts receivables/annual credit sales/365

Apple= 21,275,000/156,508,000/365=0.00037

Microsoft=17,815,000/73,723,000/375=0.00064

-Microsoft collects its receivables for a shorter period than apple.

3. Profitability Ratios

Gross profit margin=sales-cost of sales/sales

Apple= 156,508,000-87,846,000/156,508.000=43.87%

Microsoft=73,723,000-17,530,000 /73,723,000=76.22%

-Apple has a lower cost of sales ratio to sales than Microsoft.

Return on assets=Net income/total assets

Apple= 41,733,000/176,064,000 =0.237

Microsoft=16,978,000 /121,271,000=0.14

Apple’s returns on assets is higher than Microsoft.

Return on equity=Net income/shareholders equity

Apple= 41,733,000/118,210,000 =0.353

Microsoft=16,978,000 /66,363,000=0.02558

The equity return represent the ratio of available funds to the shareholders, Apple shareholders get more funds to assets than Microsoft.

4. Leverage Ratios also called Debt Utilization Ratios

debt-to-equity ratio=total Dedt/Total Equity

Apple= 0

Microsoft= 10,713,000+ 1,231,000 / 66,363,000=18%

Debt Ratio=Total Dedt/total Assets

Apple= 0

Microsoft=10,713,000+ 1,231,000/121,271,000=9.8%

-Apple does not have any debt, hence cannot be compared with Microsoft.

5. Coverage Ratios

Debt coverage ratio=Net operating income/total debt

Apple= 0

Microsoft=16,978,000 /10,713,000+ 1,231,000=1.42

-Apple does not have any debt, hence cannot be compared with Microsoft.