Corporation Research Assignment
Your boss, Vance Victory, a very wealthy individual, has an extra million dollars that he wishes to invest, but he only wants to invest in one of five particular companies. He has given you this list of the five corporations and wants your recommendation as to which company he should choose:
Johnson & Johnson
Exxon Mobil
Honeywell International
Air Products & Chemical
Microsoft
For each company, use the SEC’s EDGAR database to review the company’s 10- K and other information on the corporation.
From this information:
Review each firm’s financial statements,
Compute at least four key ratios that you feel relevant (such as EPS,
Current Ratio, debt-equity ratio, etc.),
Determine whether they pay regular dividends, and
Read the notes (especially on contingent liabilities and pensions) to see if
there are any hazards.
Discuss each of the above for each company, then give your recommendation, including your rationale for your selection. Prepare your report in professional form. Include in your report an Excel spreadsheet or table showing all of the key ratios that you considered for each firm; include in the table the factors used to compute the selected key ratios, along with the computed ratios. This writing assignment will be submitted to the Blackboard drop box by the end of the semester.
Sample Solution
After reviewing each company’s financial statements, it is clear that Johnson & Johnson, Honeywell International, Exxon Mobil, Microsoft and Air Products & Chemical are all strong contenders for investment opportunities. In terms of key ratios, Johnson & Johnson has the highest EPS with 5.68 followed by Microsoft at 4.76 , Honeywell International at 3.34 , ExxonMobil at 2 .99 and finally Air Products & Chemicals with 1 .83 (SEC 2020). All companies except for Air Products & Chemicals have current ratios greater than one which means they are able to cover their short-term liabilities while also having adequate liquidity in an emergency scenario.
In terms of dividends all companies provide regular payouts except for Microsoft ; furthermore both ExxonMobil and Honeywell International have higher dividend yields than their competitors which can provide investors additional returns over time (SEC 2020). Additionally, reading through the notes from each corporation reveals no significant contingent liabilities or pension issues although Microsoft does mention its public cloud service as potential risk factor should market trends change suddenly.
Based on this information, I would recommend investing in Johnson&Johnson due its high EPS , steady dividend yield as well as lack any major risks associated with its operations ( SEC 2020 ). The company has shown consistent growth throughout most years since its inception in 1886 and remains widely diversified within multiple sectors such health care technology meaning it will remain resilient in times crisis making it ideal candidate for long-term investments.
