Using Common Size Data for Investment Analysis
Assume that you are a trust officer for the Joss Bank. You are attempting to select a manufacturer s stock for a client s portfolio. You have secured the following data:
Required:
CONCEPTUAL CONNECTION Comment on the relative performance of these firms.
Introduction:
A financial manager or investor carries out an investigation to perceive how a company’s capital structure differs from its rivals. They can mention important objective facts by dissecting explicit details in connection to all resources.
Common size analysis is additionally an incredible way to compare organizations of various sizes in a similar industry.
Common size statement is useful to the investor as it helps him to analyze the return on investments made by other investors in the company.
To compare:
The performance of the given firms.
As per the industry average (5 Year Average), the “sales growth” of the industry is lower than the individual companies.
If any person wants to decide the investment in these companies, then some analysis needs to be performed before investing:
1. The “sales growth” of the industry is lower than the individual companies.
2. Net income of industry average is much better than an individual firm.
3. Investment growth is lower of industry comparison of other five company...
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