Question

Discuss industry and company specific events regarding the company on which you completed your ratio analysis. Include any pertinent financial events. Also, discuss the stock price fluctuation over the last 8 weeks. Include a hypothetical investing situation and demonstrate what would have happened to your investment during the time period. Indicate any times during the hypothetical investing window that you would have bought or sold based on public information.

Discuss each question thoroughly using essay format and/or mathematical theorem where you deem necessary. Answers may be written or typed; answers should not exceed ½ page in length.

Answer 1

A ratio analysis is a quantitative analysis of information contained in a company’s financial statements. Ratio analysis is used to evaluate various aspects of a company’s operating and financial performance such as its efficiency, liquidity, profitability and solvency.

Let's calculate the current ratio for three companies, for the fiscal year ended 2017.

Company	Current Assets	Current Liabilities	Current Ratio
Apple Inc.	$128.65 billion	$100.81 billion	128.65/100.81 = 1.28
Walt Disney Co.	$15.89 billion	$19.6 billion	15.89/19.6 = 0.81
Costco Wholesale	$17.32 billion	$17.5 billion	17.32/17.5 = 0.98

Stock price fluctuation over the last weeks.

The stock market has seen a sharp correction over the few days, making investors anxious and jittery. It is often during a sliding market when investors make ill-advised moves. And end up paying a heavy price. This benchmark is usually the purchase price but could also be the highest level touched by the stock. Future decisions on the stock are based on this price. In a falling market, anchoring to a price level can make investors hold on to stocks longer than they should.The share price may have dropped due to any reason but investors hold on because it is below the value to which they have anchored the investment. They cling on to hope that the price will revert to that level without asses.

The hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

1 year	3 years	5 Years	10 Years
$7	$22	$39	$89