Premium Essay

A Comparative Analysis of the Profitability of Two Potential Equity Investments

In: Business and Management

Submitted By jzaharchuk
Words 718
Pages 3
Running Title

A Comparative Analysis of the Profitability of Two

Potential Equity Investments

Janet Zaharchuk

BUSI 1043 – Introduction to Financial Accounting

Professor: Brent Koritko

Sunday, July 26, 2015

Yorkville University

INTRODUCTION The purpose of this report is to perform a comparative analysis of the profitability of two potential equity investments: Auto Wash Bot Ltd. (AWBL) and Popeye’s Muscle Wash Ltd. (PMWL). AWBL is selling 50% ownership for $100,000 in efforts to pursue expansion in the mobile device industry, and PMWL is selling 100% of its business for $100,000 to pursue retirement. A complete analysis of each company’s income statement will report key issues in both firms, as well as offer a recommendation given the case facts. REVIEWING LAST YEAR’S EARNINGS Comparative Income Statements Auto Wash Bot Ltd. & Popeye’s Muscle Wash Ltd. (for the year ended December 31, 2015) | Auto Wash Bot Ltd. | Popeye’s Muscle Wash Ltd | Revenue | 375,000 | 375,000 | Cost of Goods Sold | 86,250 | 163,125 | Gross Profit | 288,750 | 211,875 | Other Expenses: | | | Advertising | 35,400 | 5,200 | Office Expense | 22,750 | 17,400 | Research | 195,000 | | Repairs & Maintenance | | 85,000 | Wages & Salaries | 40,000 | 50,000 | Total Other Expenses | 293,150 | 157,600 | Income Before Taxes | (4,400) | 54,275 | Income Tax | | *8,413 | Net Income | $(4,400) | $45,862 | The income statements for both AWBL and PMWL show that revenues are parallel at $375,000, which means both companies are successfully selling their products and services. When comparing all three measures of income, AWBL shows tremendous potential with a Gross Profit of $288,750 as the cost of goods sold are approximately 50% of…...

Similar Documents

Premium Essay

Comparative Analysis of Pnb Bank

...the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two beingthe Bank of Bombay and the Bank of Madras, all three of  which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The EastIndia Company established Bank of Bengal, Bank of Bombay and Bank of Madras as independentunits and called it Presidency Banks. The three banks merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. 1.3 Executive Summary A retrospect of the events clearly indicates that the Indian banking sectorhas come far away from the days of nationalization. The NarasimhamCommittee laid the foundation for the reformation of the Indian banking sectorConstituted in 1991, the Committee submitted two reports, in1992 and 1998, which laid significant thrust on enhancing the efficiencyand viability of the banking sector. As the international standards becameprevalent, banks had to unlearn their traditional operational methods of directed credit, directed investments and fixed interest rates, all of whichled to deterioration in the quality of loan portfolios, inadequacy of capitaland the erosion of profitability. The recent international consensus on preserving the soundness of......

Words: 5074 - Pages: 21

Premium Essay

Investment Analysis

...Investment Analysis Table of Contents UNIT 1 2 DQ1 2 DQ2: Describe the relationship between risk and return 4 DQ 3How can we use the Modified Altman and Modified Chanos algorithms to detect inflection points in determining leverage shifts? 5 UNIT 2 7 DQ 1: Describe the concept behind an efficient capital market. 7 DQ 2: Do you believe we have efficient capital markets? 8 DQ 3: What are the four required financial statements under IFRS and GAAP? 8 DQ 4: How do some managers improperly manipulate revenue and earnings 9 References 11 UNIT 1 DQ1 The recent financial reporting failures that have come to the foreground are due to the following factors. The write-up discusses why such failures took place and also gives examples for the same. Inaccurate accounting Financial reporting failures begin with inaccurate reporting at the preparation level itself. Be it deliberate or unknowing, the firms’ failure to prepare financial statements accurately is putting stability and future of the financial world in jeopardy (Bhattacharya, 2006). Grant Thornton’s analysis of the financial statements of 49 law companies belonging to the UK market has revealed that 20 percent of these companies have such accounting policies that conflict with the treatment of figures in the profit and loss account and balance sheet, while a further 10% are unclear because of inadequate narratives, according to a new report released on 22 November 2010 (Grant......

Words: 3824 - Pages: 16

Premium Essay

Comparative Analysis of Smdc and Dmci Holdings

...Subject: Comparative Financial Statement Analysis of DMCI Holdings Inc. and SM Development Corporation 1. This refers to your instruction to submit a study on what would be a better investment between DMCI Holdings, Inc. and SM Development Corporation. To comply with it, I made a comparative analysis on both companies’ financial statements. 2. I made use of their profitability, revenue-generation, returns on asset and equity based on their audited financial statements (attached) for the years 2006, 2007, 2008 and 2009 retrieved from BusinessWeek – comparing the year-to-year fluctuations within the firms, and comparing the ratios between the companies. 3. Year over year, DMCI Holdings, Inc. has been able to grow revenues from Php 21.2 B to Php 29.7 B and had a revenue growth as high as 98.64%. On the other hand, SM Development Corporation has been able to grow revenues from Php 3.4 B to Php 5.6 B, year over year, and had a revenue growth high of 64.05%. 4. Based on the Return on Assets ratios, DMCI Holdings, Inc. had as much as 8.12% (2009) ROA, while SM Development Corporation made as much as 11.25% (2006) ROA. 5. Based on the Return on Equity ratios, DMCI Holdings, Inc. made as high as 22.88% (2009) ROE, while SM Development Corporation had an ROE as high as 17.01%. 6. The mean ROAs of DMCI Holdings, Inc. and SM Development Corporation are almost similar (6.6% and 7.6%, respectively) and show little significance in terms of their difference. On the other hand, the......

Words: 446 - Pages: 2

Premium Essay

Investment Analysis

...Investment Analysis | ACCT 557 - Financial Accounting | Aseelah Thomas | 1. Company Analysis * Coca-Cola (KO) Dr. John Pemberton, a local pharmacist from Atlanta, Georgia, created the syrup known as Coke. This syrup was then combined with carbonated water, and the mixed product was distributed to be sampled, which was then distributed to locals as a soda fountain drink. Frank Robinson, which is John Pemberton’s partner and bookkeeper, then suggested the name Coca-Cola and created in his own unique script the famous trademark for the company. Prior to the John Pemberton’s death, which was in 1888, portions of the cola company were sold to a choice of associates, and the remaining interest was sold to Asa G. Candler. Coca-Cola is now an international business that produces its’ products on a local scale, within a majority of communities. Its beverages are available and sold in more than two hundred countries with over thirty-five products internationally. In 2010 and 2011, CCE’s entire North American business was acquired and then called Coca-Cola Refreshments (CCR) instead. This created entity was due to a partnership between Coca-Cola Company and Coca-Cola Enterprises, which is the largest bottler entity. The company’s headquarter is located in Atlanta, Georgia, which its birthplace. The current CEO is Muhtar Kent, and has over 195 executives. The company’s 2012 10-k confirms it had approximately one hundred and sixty thousand employees,......

Words: 1677 - Pages: 7

Premium Essay

Comparative Analysis - Tesco & Sainsbury

...The evaluation of financial statements of organisations is critically important for the assessment of the entire performance of the firm and finally evaluation of better investment decisions. There are different financial tools that are accessible for establishing relevant analysis of the financial statements of organisations (Fernie & Ebooks Corporation, 2005: 9). One of the financial tools that are widely used in evaluating the financial statement is ratio analysis, which not only assists in the evaluation of the company’s performance but also gives room for effective comparison of the performance of one firm to that another (Baker, 2011:1). In this report, the main goal is to make comparison of two UK based firms; Tesco and J Sainsbury Supermarkets through the determination of ratio analysis for both of these firms over a time period of three years. Overview of Tesco Tesco is among the top food retailers in Ireland and United Kingdom with about 2715 retail stores located countrywide. Tesco was found by Jack Cohen in the year 1919 and its headquarters are located in East London. The management of the company has shifted forward by two major individuals inclusive of Sir Terry Leahy as the CEO and David Reid as the Chairman (Yahoo Finance, 2013:1). The company has a definitive product range such as Groceries, financial services, telecoms and consumer goods. The total revenue of the firm by March 2013 was about £ 43.6 billion with operating income of about £ 2.272......

Words: 2550 - Pages: 11

Premium Essay

A Comparative Analysis of Various Investment Avenues with Respect to Risk & Return

...A COMPARATIVE ANALYSIS OF VARIOUS INVESTMENT AVENUES WITH RESPECT TO RISK & RETURN A Project Report Submitted in partial fulfillment of the requirements for the Award of Degree of E-MBA Submitted by : Prabhjeet Singh [pic] BHARATI VIDYAPEETH DEEMED UNIVERSITY, PUNE (INDIA) School of Distance Education (SDE) Academic Study Center : BVIMR, New Delhi (University established under 3 of the UGC act,1956) CONTENTS |S.No | |P.No. | | |Acknowledgement |2 | | |Certificate |3 | |1. |Introduction | | | |1.1 : Introduction |6-7 | | |1.2 Company Profile | | | |1.3 Industry Analysis |8-14 | | |1.4 Problem in the Organisation | | | |1...

Words: 17636 - Pages: 71

Premium Essay

Comparative Financial Study of Top Three Two Wheeler Companies

...A PROJECT REPORT ON “COMPARITIVE FINANCIAL STUDY OF TOP THREE TWO WHEELER COMPANIES” FOR HEROHONDA, BAJAJAUTO, TVSMOTOR. SUBMITTED TO TILAK MAHARASHTRA UNIVERSITY IN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE MASTER OF BUSINESS ADMINISTRATION (MBA) Submitted By: IRFANHUSEN BHORANIA (Batch 2008-10) Guided By: Prof.R.GANESHAN 1 MAHARASHTRA COSMOPOLITAN EDUCATION SOCIETY’S PAI INTERNATIONAL CENTRE FOR MANAGEMENT EXCELLENCE CAMP PUNE-411001 CERTIFICATE This is certify that BHORANIA IRFANHUSEN student of PAI international centre for management excellence, Maharashtra Cosmopolitan Education society, Pune has completed his field work report on the topic of COMPARATIVE FINANCIAL STUDY OF TOP THREE TWO WHEELER COMPANIES and has submitted the field work report in partial fulfillment of MBA of the college for the academic year 2008-2010. He has worked under our guidance and direction. The said report is based on bonafide information. Project guide name Prof. R Ganesan Designation Director 2 PAI INTERNATIONAL CENTRE FOR MANAGEMENT EXCELLENCE Maharashtra Cosmopolitan Education Society DECLARATION I hereby declare that the project titled “COMPARATIVE FINANCIAL STUDY OF TOP THREE TWO WHEELER COMPANIES” is an original piece of research work carried out by me under the guidance and supervision of Prof.R.GANESHAN. The information has been collected from genuine & authentic sources. The work has been submitted in partial fulfilment of the......

Words: 8258 - Pages: 34

Premium Essay

Equity Analysis Two European Hotels

...    Two European Hotel Groups: Equity Analysis Table  of  Contents     Introduction  ...........................................................................................................................................   3   Business  Description  .........................................................................................................................   4   Industry  Analysis  .................................................................................................................................   5   Current  State  of  the  Hospitality  Industry  .......................................................................  5   Future  of  the  Hospitality  Industry   .....................................................................................  5   Financial  Results  in  2005  .................................................................................................................   6   International  Financial  Reporting  Standards  ...............................................................  6   Accord  ............................................................................................................................................  7   NH  Hotels  .........................................................................................................................

Words: 5725 - Pages: 23

Premium Essay

Equity Investment

...Prof. Alfred Liu Chapter 1: Reporting Equity Investments in Other Companies  Example 1: The Cost/Equity Method and Increase of Investment Company A made an investment in one of its local competitors, Company B. For the following events, use the appropriate accounting method and record journal entries for Company A. 1/2/2012 – A purchased 10% of B’s shares for $20,000. 12/31/2012 - B reported net income of $100,000 and declared and paid dividends $10,000 to its shareholders. 1/2/2013 - A purchases an additional 20% of B’s common shares for $45,000. 12/31/2013 - B reports net income of $120,000 for 2013 and declared and paid $11,000 dividends to all shareholders. Analysis: The objective of retroactive adjustment – as if the equity method had been used from the first day of investment. Two accounts need to be adjusted: a) Investment account b) Retained earnings (historical equity income) or AOCI. Solution: In 2012, the cost method was appropriate because we didn’t know the market value of the investment. Record the investment on 1/2/2012 for A: Dr. Investment in B 20,000 Cr. Cash 20,000 Net income reported by B in 2012: No journal entry under the cost method. Record the dividends paid by B to A on 12/31/2012: Dr. Cash 1,000 Cr. Dividend income 1,000 Record the increase in investment on 1/2/2013: Dr. Investment in Ivanhoe Mines 45,000 Cr. Cash 45,000 Retroactive adjustments to investment and retained earnings on 1/2/2013: Dr. Investment in Ivanhoe Mines 9,000 Cr. Retained......

Words: 2149 - Pages: 9

Free Essay

Investment Analysis

...INVESTMENT ANALYSIS Table of Contents 1.0. Introduction: 3 3.0. Advantages of frequency distribution: 3 4.0. Analysis of returns of Reliance industries limited 4 3.1 Analysis of return of ONGC: 5 3.2 Analysis of return of Bharti Airtel: 6 4. Measurement of central tendency: 6 4.1 Mode: 7 4.2 Median: 7 4.3 Mean 7 5. Conclusion: 8 REFERENCES 10 1.0. Introduction: Generally shares are issued in the primary market and new issued shares are traded in the secondary market. BSE and NSE are two renowned stock exchanges which plays an important role in Indian stock market. Most of the big companies in India are listed in these stock exchanges. The companies are enlisted with these stock exchanges as per rules and regulation specified by particular stock exchanges (Greer and Kolbe, 2008). In Indian context the company distributes the shares in lieu of capital with the help of these stock exchanges. It is an essential pillar of private sector companies. Mallin and Ow–Yong (2009) commented that capital formation is the main function of stock exchanges. Beside the main function stock exchanges in India do lots of work. It provides a place where all the securities are traded. Security market provides a linkage between saving sector and corporate sector. Stock market generally provides the all the information about price and trading of the securities altogether. The author selects three big companies i.e. Reliance industries ltd, ONGC, Bharti Airtel Ltd, to......

Words: 2176 - Pages: 9

Premium Essay

Mar Analysis of Risk and Profitability

...Analysis of Profitability Based on the information from Marriott’s balance sheet and income statement, Marriott’s Return on equity (ROE) in fiscal 2013 was -41.66%. This means that each dollar of Shareholder’s equity generated -41.66 cents in net income. To determine whether an ROE of -41.66% indicates good or bad performance, we might compare Marriott’s 2014 ROE to its ROE for the prior year. Marriot’s ROE for Fiscal 2013 was -46.37%. Thus, Marriott’s profitability as measured by ROE increased by 4.71%. Marriott has engaged in large share repurchase programs such as treasury stock – the repurchased shares are recorded at their purchase price a reduction of shareholders’ equity, resulting in a negative amount of total shareholders’ equity. Total liabilities substantially exceed total assets, thus ROE is not a meaningful measure for Marriott. On the other hand, Marriott’s ROA for Fiscal 2014 was 11.03% - this indicates that Marriott earned 11.03 cents for each dollar of assets in 2014. ROA for fiscal 2013 was 9.53%. This increase indicates that Marriott improved its use of assets between 2013 and 2014. The following exhibit shows the components of Marriott’s ROE for fiscal 2014 and 2013. Marriott’s financial leverage ratio is -3.78 for fiscal 2014 increased from -4.87 in 2014. A financial leverage ratio of -3.78 indicates that each dollar of equity finances about $-3.78 of assets. This ratio is again, not a meaningful measure for Marriott. We also see from the......

Words: 1855 - Pages: 8

Free Essay

Comparative Analysis of Two Works

...Comparative analysis Comparative Analysis of two works E M. Tu English Literature 125 M V 05 August 2012 Comparative analysis Comparative Analysis of two works The creative process is often filled with emotions, and throughout it, it is not uncommon to experience the whole gauntlet of highs, lows and everything in between. The poems, “poetry” and “constantly risking absurdity” are two works that are filled with similarities in the creative process and yet they are very different. These two works give insight to the creative process from each poet’s perspective. They are both excited by it, but they achieve their goal through traveling different routes. As much as they like and appreciate the finished product you cannot help but believe that they are just as fascinated, captivated and even enthralled by the process itself. The creative process for them is a lot like certain aspects of life, and it is demonstrated in their work. Ferlinghetti’s experience is not one made up purely of joy, in fact; it is filled with struggle, but it is a journey in search of joy and of beauty. He must take risks and is willing to do so in pursuit of the desired goal every time he performs. He starts his poem in a manner using words that immediately catches your attention. You are immediately drawn in by his description of the risks that a poet must take each time he performs before an audience. There is always the possibility that he may end up looking like a fool (risking absurdity)...

Words: 2816 - Pages: 12

Free Essay

Private Equity Investment

... D O Private Equity Investment in Russia: Alliance Cellulose Limited N In April, 1995, portfolio managers were reassessing the investment climate in Russia. Since the disintegration of Communism and the Soviet Union in 1991, western investors had been intrigued by the potentially huge returns that could be gained by participating in the restructuring of the Russian economy. Russia’s transformation to a market system, however, had been highlighted by missteps and disappointments. Foreign investors who had jumped into the market only eight months earlier were burned badly by a general market collapse in October. Furthermore, Russia’s political and economic future were uncertain. O Nevertheless, Russia possessed many attractive features that could reward those with the courage to invest at this early stage of market development. Russia’s natural resources accounted for significant portions of the world’s proven oil and gas, timber, coal, and minerals reserves. In addition, the privatization process, lack of internal capital, and country-specific risk resulted in valuations for Russian companies that seemed to be small fractions of their world peers. T Russia in 1995 was frequently compared to America’s “Wild West,” when the search for riches and general lawlessness combined to create very volatile conditions. While western money managers were drawn to Russia by tantalizing asset valuations and high market growth potential, they were quite......

Words: 10157 - Pages: 41

Premium Essay

Investment Analysis

...the holy Qur‟an and the Sunnah. Naturally, it remains deep in their hearts to fashion and design their economic lives in accordance with the precepts of Islam. The establishment of Islami Bank Bangladesh Limited on March 13, 1983, is the true reflection of this inner urge of its people, which started functioning with erect from March 30, 1983. Now, a question may arise- „what is Islami Banking?‟ According to OIC- “Islamic bank is a financial institution whose status, rules and procedures expressly state its commitment to the principle of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations.” This bank is the first of its kind in South-East Asia. It is committed to conduct all banking and investment activities on the basis of interest fee profit-loss sharing system. In doing so, it has unveiled a new horizon and ushered in a new silver lining of hope towards materializing a long cherished dream of the people of Bangladesh for doing their banking transactions in line with what is prescribed by Islam. With the active co-operation and participation of Islamic development bank (IDB) and some other Islamic banks, financial institutions, government bodies and eminent personalities of the Middle East and the gulf countries, Islami Bank Bangladesh Limited has by now earned the unique position of a leading private commercial bank in Bangladesh. History of Islami Bank in Bangladesh In the late seventies and early eighties, Muslim......

Words: 6421 - Pages: 26

Premium Essay

A Comparative Analysis of Two Private Fm Stations in India.

...Comparative analysis of Radio Mirchi 98.3 & Fever 104 FM Objective: To perform a comparative analysis of two Private FM stations in India. To identify the strengths and weaknesses of both the stations. Abstract: This research is on the Comparative analysis between two private FM radio stations Radio Mirchi 98.3 FM and Fever 104 FM. The analysis is on the basis of their programming style, Programme schedule, audience preference, the Strengths and weaknesses of both the channels. Radio Mirchi 98.3 FM: Introduction: Radio Mirchi’s holding company Entertainment Network (India) Limited (ENIL) was incorporated in 1999. After successfully bidding for licenses in the Phase I auction in 2000, ENIL launched its first station in Indore on October 4, 2001. In the space of 24 months, Radio Mirchi made its presence felt in seven cities; along the way it also became the only private FM brand in all the four metros. Radio Mirchi was also the first off the mark to launch a station from the lot of cities included in Phase II. In quick succession it launched Bangalore, Hyderabad and Jaipur in early 2006 and completed the final rollout of the remaining 22 stations recently. Programming Style: The programming content of radio mirchi principally revolves around contemporary film music. It’s a fun-filled package of pure energy hosted by turbo charged radio jockeys, who also host interviews with celebrities and engage listeners in lively......

Words: 1697 - Pages: 7