Question

1.Identify two different stock exchanges in the United States. Describe the similarities and differences between the two stock exchanges. Identify one stock from each of the two stock exchanges.

2.Using the two stocks you identified, determine the free cash flow from 2015 and 2016. What inference can you draw from the companies’ free cash flow?

3.Using the 2017 and 2018 financial statements for both stocks, prepare two financial ratios for each of the following categories: liquidity ratios, asset management ratios, and profitability ratios. You should have a total of six ratios for each stock, per year. What challenges, strengths, or weaknesses do you see?

Answer 1

1. In order to compare between two stock exchanges , we will compare between the NYSE and the NASDAQ exchanges

2.

No	NASDAQ	NYSE
1	This exchange type is based on “Dealers based Market”	This exchange type is based on “Auction based Market”
2	Mainly technology stocks having high market share are listed and traded	Large caps companies having stable operations are listed in NYSE
3	Volatility is high	Relatively stable market
4	Index followed are NASDAQ Composite and NASDAQ100	DJIA and NYSE Cap wise indices are the prominent indicators

Similarities

· Trading in automated electronic trading platform

· Has F&O segment

3. Free cash flow data for Intel Corp and Bank of America are as follows

Free Cash Flows Billl. USD
INTEL (NASDAQ)	Bank of America
2015	2016	2015	2016
11.7	12.2	27.5	20.1

· Free cash flows tells the operational efficiency of the company after deducting all the expenses .

· Higher the amount of free cash flows , more profitable was the business operations of the company for the year .

· For the technology based company Intel , we could see improvemenets In YoY increase in the FCF , but for B of A we see there has been a decrease in the FCF for the year , this may have been due to additional expenses undertaken for the stressed assets of the bank.

3

The financial ratios of the companies are as follows

Bank of America

Bank of America	2018	2017
RoA	1.12	1.19
RoE	11.36	11.58
Debt to Equity ratio	1.93	1.90

INTEL	2018	2017
RoA	16.4	7.7
RoE	28.2	13.9
Debt to Equity ratio	0.35	0.38

From the profitability ratios of Intel we can see there is strong improvements in the company’s Net profits as well as the financials are consolidated as can be seen from the improvements in RoE and RoA figures from 2017 to 2018