Finance Homework

Assignment 3: Midweek Assignment

Your instructor will assign you one of the topics for your assignment. Post your document to the appropriate W1: Assignment 3 Dropbox by Week 1, Day 4.

Topic

Shareholder Wealth Maximization

DuPont Identity Analysis

DuPont Identity Analysis

DuPont Identity Analysis

Microsoft is a major computer software organization. Its ticker symbol is MSFT. Google is a major Internet organization. Its ticker symbol is GOOG. A ticker symbol is a system of letters that uniquely identifies a stock or mutual fund.

First, conduct a DuPont Identity Analysis of Microsoft over the past five years. (Break down return on equity into its three main components—profit margin, total assets turnover, and equity multiplier; trace this over the past five years; and explain what is going on at the company.) Using annual data of the past five years, compare these three components to the appropriate industry averages over the five-year period.

Then, conduct a DuPont Identity Analysis of Google over the past five years. (Break down return on equity into its three main components—profit margin, total assets turnover, and equity multiplier; trace this over the past five years; and explain what is going on at the company.) Using annual data of the past five years, compare these three components to the appropriate industry averages over the five-year period.

Write a 1- to 2-page analysis each for the DuPont Identity Analysis of Microsoft and Google. Show your work and also provide supporting financial information.

Name your files:

· SU_MBA6010_W1_A3_LastName_FirstInitial.doc

· SU_MBA6010_W1_A3_LastName_FirstInitial.xls

Submit your analyses in a 2- to 3-page Microsoft Word document and your calculations in a Microsoft Excel sheet to the W1: Assignment 3 Dropbox by Week 1, Day 4.

Cite any sources using the APA format on a separate page.

Assignment 3: Midweek Assignment

Your instructor will assign you one of the topics for your assignment. Post your document to the appropriate W1: Assignment 3 Dropbox by Week 1, Day 4.

Topic

Shareholder Wealth Maximization

DuPont Identity Analysis

Shareholder Wealth Maximization

Shareholder Wealth Maximization

Complete the following tasks:

· Locate one publicly traded corporation that you believe is maximizing shareholder wealth. Using financial ratio analysis, justify why you believe the corporation is maximizing shareholder wealth.

· Locate one publicly traded corporation that you believe is not maximizing shareholder wealth. What is the market price of the stock of this corporation? How does it compare with the intrinsic value of the corporation? Justify why you believe the corporation is not maximizing shareholder wealth. Calculate and analyze the following thirteen financial ratios of the corporation and compare them to the appropriate industry average:

· Current ratio

· Quick ratio

· Cash ratio

· Total debt ratio

· Times interest earned ratio

· Cash coverage ratio

· Inventory turnover ratio

· Receivables turnover ratio

· Profit margin

· Return on assets

· Return on equity

· Price-earnings ratio

· Market-to-book ratio

· Create a plan of action to get the corporation back to where the corporation is maximizing shareholder wealth. What do you anticipate will be the market price of the corporation’s stock if the corporation successfully implements your plan of action?

You may refer to the Web site Finance in the Webliography for help in conducting the financial ratio analysis.

Name your files:

· SU_MBA6010_W1_A3_LastName_FirstInitial.doc

· SU_MBA6010_W1_A3_LastName_FirstInitial.xls

Submit your answers in a 2- to 3-page Microsoft Word document, and your calculations in a Microsoft Excel sheet to the W1: Assignment 3 Dropbox by Week 1, Day 4.

Cite any sources using the APA format on a separate page.