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Choosing The Best Company To Invest In

3325 words - 13 pages

Before reading any background information in this module, I looked at the case assignment. The question asked, "Which of these three companies, Yahoo, Coke, or Microsoft, do I think would be the best investment. Since my last research paper was on the Coca Cola company (located here in Atlanta), I knew of its history and the fact that the company has paid out dividends to their stockholders every year for the past forty-two years. The company also posts a $3.53 billion net profit with very little debt.Although this was the only company I had any real concrete information (pre-research) on, I was still torn between Coke and Microsoft as being the best investment. Really, is there anyone who doesn't know about Microsoft or Bill Gates? The name Microsoft alone carries a lot of weight. They are known as the computer giant monopolizing the IT industry. While I wanted to choose Coke I knew that Microsoft was too big not to invest in.Again, prior to doing any research, I pulled down the Income statements for each company and the financial graph for the last two years. Had I chosen the company on the graphs alone, Yahoo looked the best. Their graph did nothing but move upwards while Coke and Microsoft had a series of jagged ups and downs. Regardless, I looked at the income statements for the past three years and calculated the percentage of net income to their Total Revenue per year. 2004 2003 2002Microsoft 22% 31% 27%Coke 22% 20% 15%Yahoo 23% 14% 04%As you can see (and to my surprise), Microsoft dropped tremendously from the year prior. Coke has remained steady and Yahoo is showing massive movement. Obviously, after seeing this, I chose Yahoo to invest in.Now--time to actually read the module and applythe concepts and techniques.One hour later...I learned a lot more about analyzing the companies! I broke it down in a table below. 2004 2003 2002 Current Asset Ratio Debt to Equity Ratio Profit Margin Current Asset Ratio Debt to Equity Ratio Profit Margin Current Asset Ratio Debt to Equity Ratio Profit MarginMicrosoft 4.7 4.2 3.8 EPS: 1.2 Coke 1.1 1.06 1. EPS: 2.02 Yahoo 3.46 2.4 2.3 EPS: 1.08 #1) Current Asset Ratio: Total current assets / current liabilities....

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