Stock Leverage Analysis Paper
Stock Prise analysis.
HP, IBM and Apple are rivals competing in the PC industry. Three of the companies are extremely similar in that they both go for the strategy of providing low prices. The comparison of these two companies in the areas of liquidity, solvency, and profitability based on each of their annual financial reports ending in October 2014 show the following:
Fig: 6 month stock price of HP
According to Google Finance, IBM’s stock price is at $164.64, earning per share $11.52, total debt to assets 25.23 and expecting to be growing more. When we analyse these ratios we realize that HP is trailing behind IBM. Though HP has more current assets when compared to IBM, it equally has greater claims for the assets, thus bringing down the ratios as …show more content…
Inventory turnover ratio measures the number of times average inventory was sold during a period of time.
Fig : 6 month stock price of APPLE
The activity ratios are basically the cash conversion capacity of a company. The cash is the king, and the two important assets that determine this are receivables and inventories. Hence shorter the cycle better the cash position. So when we analyze the inventory ratios of both companies, we realize that though HP has appreciable sales revenue, the cost for it is more thus reducing the inventory turnover when compared to IBM. Added to this we can also see that HP working capital is blocked for more days in inventory when compared to IBM. References:
HPQ Stock Quote - HP Inc. Stock Price Today (HPQ:NYSE) - MarketWatch. (March). Retrieved from HYPERLINK "http://www.marketwatch.com/investing/stock/hpq"
HP, IBM and Apple are rivals competing in the PC industry. Three of the companies are extremely similar in that they both go for the strategy of providing low prices. The comparison of these two companies in the areas of liquidity, solvency, and profitability based on each of their annual financial reports ending in October 2014 show the following:
Fig: 6 month stock price of HP
According to Google Finance, IBM’s stock price is at $164.64, earning per share $11.52, total debt to assets 25.23 and expecting to be growing more. When we analyse these ratios we realize that HP is trailing behind IBM. Though HP has more current assets when compared to IBM, it equally has greater claims for the assets, thus bringing down the ratios as …show more content…
Inventory turnover ratio measures the number of times average inventory was sold during a period of time.
Fig : 6 month stock price of APPLE
The activity ratios are basically the cash conversion capacity of a company. The cash is the king, and the two important assets that determine this are receivables and inventories. Hence shorter the cycle better the cash position. So when we analyze the inventory ratios of both companies, we realize that though HP has appreciable sales revenue, the cost for it is more thus reducing the inventory turnover when compared to IBM. Added to this we can also see that HP working capital is blocked for more days in inventory when compared to IBM. References:
HPQ Stock Quote - HP Inc. Stock Price Today (HPQ:NYSE) - MarketWatch. (March). Retrieved from HYPERLINK "http://www.marketwatch.com/investing/stock/hpq"