Return on equity, Financial Management

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Your quantitative analysis will describe the financial strength of you company using the metrics we discussed in class. You may use other measures at your discretion, but the following are required to be addressed in your presentation and the accompanying literature and must not only be quantified but described.

  • Liquidity- use whichever ratio you think is best
  • Return on equity
  • Return on assets
  • Dividend payout ratio (if it pays a dividend, is it sustainable based on net income?)
  • Price/earnings ratio (especially compared to industry peers)
  • Stock price performance

Trends

Does your company exhibit any trends over the past 3-5 years? Has the profit margin steadily grown to show greater levels of management efficiency? Has your P/E ratio dropped, signifying a potentially optimum time to invest in your company? Have your debt levels and interest rate expense been reduced? If so, why is that a good sign to potential investors?

Industry Comparisons

Does your company compare favorably or unfavorably with industry peers? Is your P/E ratio higher or lower than your peers, and what does that mean to investors? If your P/E is higher, does the growth potential of your company warrant the higher stock price? If your P/E is lower, does management have a plan to re-charge growth going forward or will your stock linger at a lower value?


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