Investment decisions

Consider the differences between the investment decisions of internal stakeholders and those of external stakeholders.

Describe any differences in the nature of their investment objectives. Relate those differences to the types of information they would use to make investment decisions.

Select a company listed on the New York Stock Exchange and conduct a ratio analysis on the company. Organize the analysis from the perspective of management, current or potential shareholders, and creditors. Once the ratios are calculated, use either Dun & Bradstreet’s Key Business Ratios or Robert Morris Associates’ Annual Statement Studies to compare your company’s results with other companies with similar operations.

Refer to Gateway Inc. (www.gateway.com), and Hewlett-Packard (www.hp.com), and find the most recent annual reports.

Required:

A. Prepare a vertical analysis.

B. Prepare a horizontal analysis.

C. Complete a ratio analysis.

D. Comment on any trends you see.

E. Compare the two companies.

Solution: