Financial Analysis Essay

The company that I chose to analyze is Tootsie Roll. Throughout my life I have always had somewhat of a sweet tooth and have been very intrigued in the process of business. Now I have the opportunity to look further into such a great company such as Tootsie Roll and really find out how the business is run and what type of work is invested in such a well known business.

Life insurance is meant to provide funds to replace a breadwinner's to protect and support dependents. Chad and Haley are dependents, not income providers. Therefore, the purchase of life insurance is unnecessary and not recommended. The Dumonts should use the money they would spend on policies for the children to increase their own coverage.

A public show of Jim Cramer, named Mad Money, broadcast Cramer’s fundamental and technical market analysis in stock markets. His trading stocks had been announced five days before real transaction and would keep 30 days and his trust portfolio, with charity purpose, were open to online viewers. Different from equity firm analysts with interests in recommending stocks, Jim Cramer was an unaffiliated analyst without conflict of interests. The study of this journal test Mad Money trading results during the period of July 28th 2005 to February 9th 2009 by evaluating abnormal returns on the markets on the stocks recommended by Jim Cramer.

The purpose of an analyst it to give recommendations on investments; they are expected to do proper research and fully understand the investments they are making recommendations for. Investors also expect analysts to remain unbiased and uphold their fiduciary duties. Investors put their trust into analysts because it is their field of expertise, and they have a better understanding on the information released in the financial statements. The investor’s biggest conflict is deciding who to trust for information; the investor is responsible for doing their research when it comes to choosing an analyst or which company to follow. In 1999, Merrill Lynch was one of the leading brokerage firms in the world. With that reputation, investors believed that the company would act in their best interest. Unfortunately, when the internet boom bubble burst, Merrill Lynch’s unethical behaviors were brought into the light. In 2001, a former client of Merrill Lynch filed a claim against Henry Blodget for producing a misleading analysis report without stating his conflicts of interest; the customer acted on information in belief that the report was unbiased when Merrill Lynch actually had a relationship with the issuer that was being analyzed. The problem with this action is that federal securities laws do not necessarily give investors that right to file claims against analysts or any other employee at a broker-dealer firm; even the employee acts unethically and misleads the client. Regardless of how current laws are interpreted by the Supreme Court, Merrill Lynch decided to settle this matter for 400,000

First, research was conducted for a total of 8 quarters (Q4 2012 to Q3 2014, Exhibit 0) based on publicly available information. The ERC analysis requires each bank’s alpha and beta, estimated by regressing the CAPM Model (Exhibit 1) using a period of 200 trading days before Q4 2012, which are then used to estimate the expected daily return for each equity in a 7-day window (day -3 to day +3) around each earnings announcement date (Exhibit 2). Each quarter’s cumulative abnormal returns, is regressed over unexpected earnings to arrive at the ERC (Exhibit 3). Secondly, forecast error, a measure of analyst accuracy, was determined by unexpected earnings and calculated as the difference between actual earnings per share (EPS) and estimated EPS divided by the stock price three days prior to the earnings announcement. In addition to mean and the median of these errors, standard deviation (SD) was used as a measure of volatility, for both the consensus among analysts revising recommendations and the relative number of analysts agreeing/disagreeing (numeric rating of 1 for sell and 5 for strong buy).

Many believe that the concept of insider trading is imbalanced and goes against the reassurance that people have in the capital markets. Others have claimed that insider trading makes for headstrong encouragements being allowed; so the corporate managers can make more money on negative or positive information. Some critics even feel that insider trading is not an efficient compensation arrangement due to the fact that it rewards risk opposed managers with a benefit the same as lottery tickets. I believe that, while these ideas have importance, insider trading can be very beneficial to society.

Clarke et al. (2004) researched this issue as well and concluded the long-term average abnormal returns for upgrades issued by IR, IB and brokerages are insignificantly different from each other; downgrades as well. Cliff (2004) found buy recommendations from IR significantly outperformed those of IB, and sell recommendations underperformed. Lin et al. (2005) examined time patterns rather than performance. Concluding, IB analysts are significantly slower to revise their buy and hold recommendations. However, the evidence is not as strong for downgrades from strong buy.

INDIVIDUAL ASSIGNMENT FIN202 | | TOPIC: Financial statement analysis and stock valuationLECTURE: PHAM LIEN HASTUDENT: HOANG MY LINH ROLL NUMBER: FB00073 CLASS: FB0609 - FPT University | | Contents I. INTRODUCTION 2 1. Main production 2 2. Segment market 2 3. Vision 2 4.

Werner F. M. De Bondt and Richard Thaler conducted a study to investigate the stock market. This study examined the impact the overreaction of market behaviour and the psychology of individual decision making has on stock prices. The main goal of this study was “to test whether the overreaction hypothesis is predictive” (pg. 795). They tested two hypotheses (pg. 795):

For many people, the idea of sifting through financial reports on a regular basis is something of great abhorrence to them, and yet if you wish to invest in winning shares, you have to do a “fair” amount of research and work. However, you do not need fancy qualifications, and there are plenty of intelligent people that make highly complex models that are useless. What you need to do is find a happy middle ground where you are neither doing too little or suffering from paralysis by analysis.

Contrary to this belief, earnings management can benefit the market. This can be viewed from the aspect of stock market. According to the research conducted by Aleš Čornanič and Jiří Novák, through earnings management, the stock price of a company can be stabilized. This makes a business with a high potential for growth more attractive to investors. Resources are therefore allocated to more efficient companies listed on the stock exchange and as a result the UK economy benefits as a whole. Walker (2013) says that firms benefit from a stable stock price and argues that earnings management is not always bad, but accepts that it must be made more transparent as well as increasing investors’ understanding of it.

Moreover, securities analysts play the important roles of the users and providers of information and their sources of information include public information that all analysts know and private information that is possessed by individual analysts (Barron et al., 1998). Therefore, both the improvement of the transparency of listed companies ' public information and analysts ' private information can lead to an increase of the accuracy of analysts ' forecasts. Due to the lower costs of acquisition, the public information issued by the listed companies that act as the main sources of information of securities analysts is particularly important among them (Schipper, 1991), scholars ' research also focused on the correlation between the

The fraction of corporate equity owned by institutional investors has grown considerably in the past several decades; institutional holding of shares in U.S. equities has increased from approximately 16% in 1965 to over 50% in 2010 (Federal Reserve Board, 2011). The fact that institutional investors are managing such a sizable wealth invested in U.S. equity market has potential important role in term of setting market prices. The growing impact of institutional investors on capital markets has induced to increased research on the behavior of this group of investors both by academics and policy makers, who tend to believe that institutional investor follow momentum based strategies, and often are alleged to herdinglike behavior and following destabilizing trading strategies.

Alain Coën, Aurélie Desfleurs and Claude Francoeur 9.1 9.2 9.3 Introduction Conceptual framework Measures of financial analysts’ forecast errors and data 9.4 Empirical results and analysis 9.5 Conclusion

[8] Bhushan, R. (1989). Firm characteristics and analyst following. Journal of Accounting and Economics, 11(2-3), pp.255-274.