Characteristics of Companies with Financial Prowess

1468 Words3 Pages
bulb-icon

Recommended: Key success factor in operating a business and how to avoid failure

Characteristics of Companies with Financial Prowess
The internet has revolutionized information exchange. This disruptive technology improved availability of information to the individual investor. Prior to the internet, the investment world was driven by brokers and financial institutions. The playing field has vastly expanded. Individuals are now investing with the aid of technology. Having more players with access to a firm’s financial information, has given rise to increased scrutiny surrounding financial performance. Financial reporting provides a window into how a firm performs. The internet has expanded who is capable of peeking inside. This increased speed in information has raised the volatility around stock pricing (Schmidt, 2011) and enhanced the world of “stock-picking” (Fuhrmann, 2012).
Technology has allowed greater access to information (including misinformation). The use of financial indicators helps identify successful companies. This practice has been in effect for many years. Indicators such as return on equity (ROE), earnings and earnings growth are common place when valuing a firm. These common indicators can be used to identify sound investment opportunities. Understanding how investors evaluate a firm is critical to the firm optimizing value and meeting stakeholder’s expectations.
This analysis will evaluate two successful firm’s Abbott Laboratories (ABT) and Wal-Mart (WMT). It will identify common characteristics utilized by these two firms in support of improved value. The discussion will center on a firm’s financial reporting and how earnings generated can be used for increasing value.
Assessment
Financial performance is the predominant predictor used by investors. Financial indi...

... middle of paper ...

...ntice Hall.
Fuhrmann, R. (2012, February 6). How the internet has changed investing Investopedia, Retrieved from http://www.investopedia.com/financial-edge/0212/how-the-internet-has-changed-investing.aspx
Graham, J. (2000). How big are the tax benefits of debt?. In The Journal of Finance. Retrieved from http://onlinelibrary.wiley.com/doi/10.1111/0022-1082.00277/abstract
McRoberts, F. (2002, September 1). The fall of andersen. Chicago Tribune. Retrieved from http://www.chicagotribune.com/news/chi-0209010315sep01,0,2011837,full.story
Schmidt, M. (2011, November 5). The financial characteristics of a successful company. Investopedia, Retrieved from http://www.investopedia.com/articles/stocks/08/successful-company-qualities.asp
Yahoo finance. (2014). Retrieved from http://finance.yahoo.com/q?s=ABT
Yahoo finance. (2014). Retrieved from http://finance.yahoo.com/q?s=WMT

Show More
Related

  • Analysis Of Wendy's Corporation And Bob Evans Farms

    1011 Words  | 3 Pages

    This requirement makes it important to look through a majority of the return ratios, which include return on sales, return on assets, and return on equity. Additionally, investors are also interested in the ratios related to the company’s earnings, such as earnings per share (EPS) and PE ratio. Looking at return on sales, we can see that Wendy’s has a 7.27% return on sales and Bob Evans has a 1.23%, which demonstrates Wendy’s has a higher profit margin. Moreover, Wendys’ return on assets is 2.85% and Bob Evans is 1.58%. Also, Wendy’s and Bob Evan 's have return on equity ratios of 6.66% and 4.30%, respectively. All of these return ratios show that Wendy’s has a better handle on turning working capital into revenue. On the other hand, although Wendy’s return ratios are higher than Bob Evans, Bob Evans has a better performance on earnings per share and PE ratio. This is due to Bob Evans having less common stock share outstanding, which makes their earnings per share and PE ratio higher than Wendy’s. Due to the EPS being higher for Bob Evans, we would recommend that investors look towards Bob

    Read More

  • Financial Analysis of Verizon versus AT&T

    1338 Words  | 3 Pages

    You would not buy a home, car or other large purchases without researching what product offered you the most for your money. The same is true when investing in a company. Investors do avid research on multiple companies to find what company matches the investors' criteria. In this paper Team C will research both AT&T and Verizon's financial documents. Team C will compare selected ratios, cash flow and make recommendations how both companies can manage cash flow for the future.

    Read More

  • Harley-Davidson Performance Analysis

    1508 Words  | 4 Pages

    The first method we will review is the accounting method. Through this accounting approach we will analyze specific ratios and their possible impact on the company's performance. The specific ratios we will review include the return on total assets, return on equity, gross profit margin, earnings per share, price earnings ratio, debt to assets, debt to equity, accounts receivable turnover, total asset turnover, fixed asset turnover, and average collection period. I will explain each ratio in greater detail, and why I have included it in this analysis, when I give the results of each specific ratio calculation.

    Read More

  • Swot Analysis Of Whole Foods

    1323 Words  | 3 Pages

    After conducting a basic 10 year financial analysis of the company, it has become evident that even with a highly competitive market structure they are able to improve on their performance. Ranging from 2004 to 2013 financial information, the company has shown a significant increase in their sales revenue roughly $3865 million sales in 2004 to almost four time that valuing $12970 million in 2013, which was an “increase of 10.4% over the 53 week prior year” The company’s growth strategy has been to diversify its product market and make them...

    Read More

  • Eskimo Pie Corporation

    1314 Words  | 3 Pages

    There are many valuation methods that could be used to evaluate this company. Finding a method that valuates the stand-alone value is difficult. The stand-alone value should be dependent upon the firm’s own assets and projected future income. We decided to evaluate this company based upon two methods: The Discounted Cash Flow Method and the Comparable Companies Method.

    Read More

  • tax shield

    1344 Words  | 3 Pages

    the tax shield from debt (TS) generates a cash flow stream that is equal to the

    Read More

  • The Financial Performance of Kraft and General Mills

    1301 Words  | 3 Pages

    The report will give an overview of each company, an explanation of what type of companies we are analyzing, the purpose of each company in terms of its goals and objectives, the products and services each company produces, and what future prospects we see these companies having. The reader should gain an understanding of each company as well. We also analyze the type of industry these companies are competing in. This will help us understand where each company fits in the marketplace. This is important because it places the two companies into a broader picture. The most important part of the financial report is the financial statement analysis. In this, the annual report of each company was analyzed. It studies the firms’ past earnings to understand their operating performances. It also forecasts future profitability and risk (short-term and long term). The financial statements give information on how these risks affect expected return. In the end, the reader will have an understanding of the two companies, the industry in which they operate, its financial standing in the past and present, and future profitability.

    Read More

  • Financial Ratio Analysis Report Of Ford Motor Company

    1668 Words  | 4 Pages

    Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.

    Read More

  • Ratio Analysis for Facebook

    765 Words  | 2 Pages

    The financial position of a company offers great insight on the performance of the company on short-term and long-term basis. This work argues that Facebook Inc. is a company with a subjective investment portfolio. The purpose of this paper is to use ratio analysis to determine the position of the Facebook as an investment destination. The first section explores two ratios and their implications to a potential investor. The second part evaluates whether Facebook is bankrupt. The succeeding section offers advice to potential investors. The work culminates by highlighting key points and making necessary recommendations.

    Read More

  • Financial Analisis of Google Inc and Yahoo Inc

    670 Words  | 2 Pages

    In respect to Google Inc. (GOOG) and Yahoo! Inc. (YHOO), I will use the financial statements for the most recent fiscal year filed with the SEC and for earlier periods. This information will be obtained by utilizing the value line which is available in the Stafford Library but I will use Yahoo Finance. In addition, they can also be found on the company websites. For assisting myself in future projects that will require my recommendations, I will briefly describe what they mean to me. This is an important process of understanding financial management whereas it is important to understand the various ratios and financials by examining and detailing and contrasting the information.

    Read More

  • Wal-Mart Case Study

    1115 Words  | 3 Pages

    The financial performance of Wal-Mart continues to be strong. It delivered another record year in 2008 as total net sales increased 8.6 percent to $375 billion. Yet, earnings growth rates and same store sales have slowed. And, the company faces a number of challenges to its operating procedures, reputation and growth prospects. Given the company’s stated objectives of “growing operating income faster than sales” and increasing shareholder value, the strategies we recommend will directly affect the company’s ability to overcome present challenges and meet these primary financial objectives.

    Read More

  • Financial Analysis on IBM Corporation

    1452 Words  | 3 Pages

    This purpose of this paper was to evaluate the financial statements of IBM Corporation during the past five years to assess the future profitability of the company. Unfortunately, this report only reflects up to four years, as appose to a five year analysis. I used Plaza College Library along with Queens Library to do my research. This helps me with the data base I needed to access and wasn’t able to at home. My professor helped me with my research; he helped me understand the things I didn’t understand. He also guided me to web pages that help me with my research. I used many search engines such as IBM company web page, Google, ProQuest, MSN Money, and Yahoo Finance. IBM web page was the best because most of my information came for the company web pages. Google was helpful because it help me find my company information that wasn’t on the web page. ProQuest is good for data base but it wasn’t helpful to my research. MSN money was very helpful I was able to get my 10k report and many other things. Yahoo Finance, I was able to get all my finance information without a problem. All the information I received, I was able to put in it in my research paper to create a 10 to 12 page research paper. In this paper I have applied knowledge of business concepts, information literacy techniques, and critical thinking.

    Read More

  • Marketing Strategy Of Walmart

    702 Words  | 2 Pages

    The corporation I have chosen to assess for this project is Wal-Mart. Wal-Mart is a retail company that is incorporated in Delaware, which trades under three segments: Walmart U.S., Walmart International and Sam’s Club. The company history shows that the road to Wal-Mart was a long one. The company started under the name Walton’s 5&10, which was opened by Sam Walton in 1950 on the Bentonville town square. Over the years the company was successful and on July 2, 1962, Sam Walton opened the first Walmart store in Rogers, Ark. By 1967 the Walton family owned 24 stores and rang up $12.7 Million in sales. In 1969 the company officially became incorporate as Wal-Mart Stores, Inc. In 1970 Wal-Mart became a publicly traded company, and the first

    Read More

  • Traditional and Contemporary Performance Measurement

    1212 Words  | 3 Pages

    In the past, the company performance was measured by asking ‘how much money the company makes?’ To a certain extent, they are right because gross revenue, profitability, return on capital, etc. are the results that companies must bring to survive. Unfortunately, in today business if the management focuses only on the financial health of the company, numerous unwanted consequences may arise.

    Read More

  • The Stock Market

    879 Words  | 2 Pages

    The biggest stock exchanges are the New York Stock Exchange and NASDAQ. The New York Stock Exchange is a large building in Lower Manhattan that does auction-style trading with a lot of face to face interaction through specialists, brokers, and buyers. There are upper floors in this exchange on which specialists determine the prices of all the stocks. This information then travels to the brokers who work auctions face to face with buyers in order to sell the stocks. America’s biggest companies, like Coca-Cola and McDonald’s, sell their stocks through this exchange. NASDAQ is a virtual stock exchange with no physical building. This exchange was created during the 1970s but began thriving during the tech boom of the 1990s. The tech boom helped this exchange become the home of more technological companies li...

    Read More

More about Characteristics of Companies with Financial Prowess

Open Document