The six selected companies are:
1. Apple Inc
2. Microsoft Corp
3. Wal-Mart Inc
4. Chevron Inc
5. Johnson & Johnson
6. Delta Airlines
AAPL
MSFT
WMT
CVX
JNJ
DAL
Cu
ent ratio
1.5
2.9
0.77
1.01
1.31
0.53
Debt Equity ratio
1.4
0.65
1.11
0.22
0.45
1.61
Assets turnove
0.18
0.12
0.57
0.13
0.5
0.73
Profit margin
21.35%
33.36%
2.81%
2.86%
20.75%
7.76%
Price to Earnings ratio
26.04
31.35
23.04
49.75
22.88
6.88
Market price to Book value
18.88
12.47
5.03
1.34
6.31
1.65
Closing stock price (1st Jun 2020)
333.46
188.36
121.24
103.24
146.77
36.97
The cu
ent ratio of MSFT is .9 followed by AAPL (1.5) and JNJ XXXXXXXXXXDAL has lowest value at 0.53. Therefore, the liquidity position of Microsoft Co is highest followed by Apple Inc. However, liquidity of Chevron Inc and Johnson & Johnson is also good as the cu
ent ratios are higher than 1.0 but Delta airlines need to improve its liquidity because of very low Cu
ent ratio.
The debt equity ratio of Delta Airlines is highest at 1.61 followed by Apple Inc (1.4) and Walmart XXXXXXXXXXChevron Inc and Johnson & Johnson, both have debt equity ratios lower than 1.0. The standard Debt equity ratio should be 2:1 and here, all the companies have lower than Standard value. It is better as the risk of insolvency is low.
Assets turnover of all the companies are quit low. Delta Airlines has Asset turnover ratio of 0.73, maximum among them followed by Johnson & Johnson XXXXXXXXXXThe standard value of Asset turnover should be more than 1.0 and therefore, all ix companies need to improve the asset management.
The profit margin of Microsoft is highest at 33.36% followed by Apple Inc at 21.35%. Chevron Inc has lowest profit margin of 2.86%. Hence, Chevron Inc, Walmart Inc and Delta Airlines need to improve their profitability positions.
Price to Earnings ratio of Chevron Inc is highest at 49.75 followed by Microsoft Inc XXXXXXXXXXand Apple Inc XXXXXXXXXXHigh price earnings ratio shows the stocks are overpriced and thus Investors need to wait a while to come down the price.
In the same way, market price to book value represents the stock price against the book value of share. It reflects the over and under pricing of security. Here, The Apple stock has higher price to book value of 18.88 followed by Microsoft at XXXXXXXXXXTherefore, one can wait for coming down the price of such stocks for buying.
The closing price of stock doesn’t show anything intrinsically. In the combination of earnings or book value, the ratio can be interpreted and conclusion can be made about the investment in security. Here, such ratios like Price earnings ratio and Price to Book values have already discussed above.
References:
Financial ratios XXXXXXXXXXApple Inc. Retrieved from: https:
www.morningstar.com/stocks/xnas/aapl/financials
Financial ratios XXXXXXXXXXMicrosoft Inc. Retrieved from: https:
www.morningstar.com/stocks/xnas/msft/financials
Financial ratios XXXXXXXXXXWalmart Inc. Retrieved from: https:
www.morningstar.com/stocks/xnas/wmt/financials
Financial ratios XXXXXXXXXXChevron Inc. Retrieved from:
https:
www.morningstar.com/stocks/xnys/cvx/quote
Financial ratios XXXXXXXXXXJohnson & Johnson. Retrieved from: https:
www.morningstar.com/stocks/xnys/jnj/financials
Financial ratios XXXXXXXXXXDelta Airlines. Retrieved from: https:
www.morningstar.com/stocks/xnys/dal/quote