Fundamental Analysis for best Companies of New York Stock Exchanges

Fundamental Analysis for best Companies of New York Stock Exchanges Introduction Financial markets facilitate the flow of fund in order to finance investments by corporations, governments, and individuals. Financial institutions are the key players in the financial markets because they serve as intermediaries that determine the flow of funds.

In the financial market different type of securities are traded like equity securities and debt securities. There are different type of financial markets those meet the individual investors preference. Such as money market are designed for short term investors to trade debt or equity as money market allows the flow of short term fund with a maturity of less than 1 year or one year .

Whereas Capital market is designed for the long term, investors as this market facilitate the flow of funds with a maturity of more than one year. In the primary financial market, only new securities are traded whereas secondary market allows the trading of existing securities that helps to change the ownership of the securities.

Investors differ with respect to the risk they are willing to incur, the desired liquidity of securities and their tax status, making some securities desirable to some investors than to others. Some economic factors, company specific factors along with industry related factors are also influenced the investors taking their decisions to invest in the financial market.

In general, financial markets are regulated to ensure that the participants are treated fairly. Many regulations were enacted. in response to fraudulent practices. Stock exchanges impose stringent rules, listing requirements, and statutory requirements that are binding on all listed and trading parties.

Top Down Financial Analysis for Picking a Stock An investor should do some analysis before they invest in a company’s stock. Before they pick a stock to invest in they need to consider some macro economic factors and to analyze some industry and company related specific information. There are some issues that investors must consider that are mentioned in below: Macro Economic Factors: • Interest Rate • Inflation • Government Budget (Deficit/Surplus) • Tax cut • Exchange Rate • International Trade • Election and policies Industry Analysis: • Oil & Gas • Gold • Banking • Utilities • Manufacturing • Retail • Technology

• Industry Risk Company Specific Performance: • Corporate Risk • Cash flow Analysis • Corporate Growth • Dividend Record • Management strength Strategy for Picking Stocks (Information Input) Information about the economy, markets and specific company and the industry where the company is belong to are very important to consider before an investor invest in that specific company. As information, significantly affect the whole market as well as the industry along with the companies operating in the respective industry.

1. Forecast Direction of Stock Market Index: The issues that are mentioned in below are used to forecast the direction of stock market index. If the following conditions are favorable then it will have a positive impact on the market thus increase the company’s stock price. On the other hand of the information about the following issues indicate unfavorable then it may have a negative impact on the market thus decreases stock price. The factors are: • National Politics (party in power) or Election • World Event and International Economics • National Economy • Interest Rate • Inflation • Money Supply • Aggregate Demand • Budget/ Taxes 2. Bull or Bear Market:(pick stocks based on Industry Risk and Tax Consideration): if the marker is bull that means investors are expecting that the future stock price will increase and they are willing to take risk then they can invest comparatively high volatile stock whereas if the market is bearish that means if investors don’t want to take much risk they invest in those company’s stock that are stable. The factors to determine whether the market is bull or bearish are: • Industry Trend • P/E ratio • Dividend Yield • Tax consideration • Capital Gain • Betas (High or Low) 3. Check with Company Specific And fundamental Information: Some information about company indicates whether the company is performing well or not. We must analyze that information before we take investment decision in a company. The factors are: • Growth of dividend

• • • • •

Growth of EPS Cash Flow/ share Capital Structure Quality of CEO Acquisition, Restructuring, Innovation

If bull or bear market and company specific information are consistent buy and hold the stock. In contrast, bull or bear market and company specific information is not consistent investor may avoid the stock.

Some Specific Reasons for Buying and Selling Stock Reasons for Buying Stock: • Undervalued stock relative to peer valuation • Great rate of revenue • Beats earnings whisper during Quarterly report • Good CEO conference call after Quarterly earnings • New product Development and sale • M&A target Reasons for Selling Stock: • Major Shareholder or institution selling at a target price • Analyst may recommend a sell based on negative research report • Not meeting Earning Whisper (Extra expectation) • Negative CEO conference call after Quarterly earnings • Poor Number( eg, falling EPS or profit margin) So far, we mentioned some important factors that we must analyze before we invest in a company’s stock. Now we divide those factors in quantitative and qualitative measures to analyze a company’s stock to invest in.

Factors an Investor Should Consider Before Investing in a Stock Investors must consider some important factors before investing in a stock. Knowing the market value of the stock is necessary. Investors buy and hold stocks with positive earnings surprises; high growth rate of stock prices, accelerating sales and stimulus for sustains future growth. In order to avoid risk of making loss, investors have to analyze the stock before they invest whether the stock has a future possibility of performing poor or not. Therefore, before an investor invests into any stocks must understand the following terms and be able to evaluate stocks by using these basic methods used to analyze stocks.

Qualitative Factors • Economic consideration: Interest Rate, Inflation, Money Supply, Aggregate Demand, Budget/ Taxes influence the whole economy. Thus, influence the industry and companies operating under that industry. Some factors may have positive affects others may have negative influence on company’s stock. So we should analyze whether the current economic condition is favorable or unfavorable impact on company’s stock before we take decision regarding investing in that company.

• Political consideration: The political situations of the company also affect the company’s stock price. If the country’s political situation is stable then the economic condition is also favorable to invest. If the political situation is not stable then the economic condition is also not suitable to invest. As it may put some adverse impact on industry thus stock price, investor should wait to invest until the economic condition get stable.

• Stock price movement: An investor must observe the price movements to evaluate a stock. S/he must monitor the fluctuations in price. It is important that the price movements are steady. If the stock price fluctuates more rapidly, then investor should avoid those stocks. Investor should invest in more stable stocks.

• Company’s History: It is essential for an investor to look at companies’ history as well as future plan before buying a stock. It is important to know how the company has been performing and do they have plans for future to expand or not. If their earlier performance is good that also indicates their future performance. If the company has a good perception in the market then investor may buy those stocks as it indicates that people are ready to pay high price for this company’s stock that result in high stock price. On the other if people have a bad impression of the company then investor should not invest on that company’s stock because their market position is not good to invest.

• Management of the Company: Management is the most important aspect for investing in a company as a company relies upon management to steer it towards financial success It makes sense - even the best business model is doomed if the leaders of the company fail to properly execute the plan. It the coordination among management is not so good then company’s performance can be unfavorable for the investors.

So investor should invest on those company’s stocks whose management is efficient.

• Corporate Governance: Corporate governance describes the policies in place within an organization denoting the relationships and responsibilities between management, directors and stakeholders. These policies are defined and determined in the company charter and its bylaws, along with corporate laws and regulations. The purpose of corporate governance policies is to ensure that proper checks and balances are in place, making it more difficult for anyone to conduct unethical and illegal activities.

Good corporate governance is a situation in which a company complies with all of its governance policies and applicable government regulations in order to look out for the interests of the company's investors and other stakeholders. Corporate governance policies typically cover a few general areas: structure of the board of directors, stakeholder rights and financial and information transparency.

• Past Performance of the Company: Another good way to get a feel for management capability is to check and see how executives have done at other companies in the past. As past performance of a company affect company’s stock price also. If the past performance of a company is good then there has also a good possibility that that company will perform better in future.

• Financial and Information Transparency: Sufficient transparency implies that a company's financial releases are written in a manner that stakeholders can follow what management is doing and therefore have a clear understanding of the company's current financial situation. Moreover if company properly discloses their financial information and that information are available then investors can easily evaluate that information and make their investment decisions.

• Stakeholder Rights: Some company gives shareholder some rights whether some companies do not give so much power in shareholders hand. In some companies all decision is in management hand, shareholder rarely can exercise their ownership rights, and they rarely can take decisions. Most of the time management takes decisions that is in favor of the management people rather shareholders. Thus, management is more reluctant in working to increase the stock price. If the company gives some relevant necessary decision, making rights to shareholders then the shareholder will take decisions that are favorable to increase the share price. Therefore, companies that give shareholder to make decision investor should invest in that company’s stock.

• Structure of the Board of Directors: The board of directors is composed of representatives from the company and representatives from outside of the company. The combination of inside and outside directors’ attempts to provide an independent assessment of management's performance; make sure that the interests of shareholders are represented.

The board of directors is responsible for protecting shareholder interests and ensuring that the upper management of the company is doing the same. The board possesses the right to hire and fire members of the board on behalf of the shareholders. A board filled with insiders will often not serve as objective critics of management and will defend their actions as good and beneficial, regardless of the circumstances.

Quantitative Factors • Financial Statement Analysis: The evaluation of a company’s financial statements (such as the balance sheet, profit and loss statement, cash flow statement) help to gain an understanding of the financial health of the company and enabling more effective decision making. Whether the company is financially strong or weak can be known by evaluating a company’s financial statement. Financial statements record financial data; however, this information must be evaluated through financial statement analysis that can be used by investors, shareholders, managers and other interested parties.

By Financial statement analysis, we can determine the past, current and projected performance of a company. Several techniques are commonly used as part of financial statement analysis including: • Horizontal analysis, which compares two or more years of financial data in both dollar and percentage form; • Vertical analysis, where each category of accounts on the balance sheet is shown as a percentage of the total account; and atio analysis, which calculates statistical relationships between data.

P/E ratio is a valuation ratio where a company's current share price is compared to its per-share earnings. Calculated as: •

Value investing - Buying low P/E stocks with the expectation that P/E will increase in future. Low P/E ratio also implies low P/B ratio. These are undervalued stocks.

They may do better in future.

• Growth investing - Buying high P/E stocks with the expectation that future earning will continue to drive up stock prices. High P/E ratio also implies high P/B ratio.

There might be persistent of growth so buy and hold these stocks.

• When P/E of cyclical stocks - Drop to single digit, it is time to sell because earning might have peaked.

If the P/E ratio is very high then we can say that recent buyers of the stock are expecting that profits sometime in the future will be high thereby they want to pay a high price per share for that stock. The ratio is important for stockholders because it indicates to them what each share has earned relative to its cost. High P/E ratios usually suggest that the stock may be overpriced.

In general, a high P/E suggests that investors are willing to pay a higher price for a company that has not reached its earning potential.

• EPS (Earnings per Share) The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. Calculated as:

It is more accurate to use a weighted average number of shares outstanding, because the number of shares outstanding can change over time. However, using the number of shares outstanding at the end of the period simplify the calculation process. .

Earnings per share are generally considered the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio.

Diluted EPS should be also considered when taking decision regarding investment because diluted EPS is the actual EPS that the shareholder get.

There are some limitations of EPS like• Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal would be a "better" company.

• Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number.

Therefore, it is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.

• Return on Equity – ROE ROE is the measure of the amount of net income returned as a percentage of shareholders equity.

Return on equity indicates how much profit a company generates with the money shareholders have invested.

ROE is expressed as a percentage and calculated as: Return on Equity = Net Income/Shareholder's Equity The ROE is used to compare the profitability of one company with others in the same industry. If the ROE is higher, it indicates the better position of the company. Therefore, investors should consider those company’s stock, whose ROE is higher. In addition, avoid company’s stock to invest with lower ROE. As ROE is the indication, how much net income the shareholders get by investing in the company’s stock.

• Return on Assets – ROA ROA indicates how efficiently company is using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage.

Sometimes this is referred to as "return on investment".

The formula for return on assets is: The ROA gives investors an idea of how effectively the company is converting the money it has to invest into net income. The higher the ROA number, the better the position of the company because the company is earning more money on less investment.

Company with the lower ROA is not performing well so investor must avoid those companies’s stock.

• Dividend per share - DPS Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. DPS can be calculated by using the following formula: Where, D - Sum of dividends over a period (usually 1 year) SD - Special, onetime dividends S Shares outstanding for the period Dividend is a good indicator whether investor should invest in that particular company or not. If investors want to invest for short term, they can buy stocks of a high dividend paying company. Because they want immediate gain as a form of dividend, rather defer the earning for future period as a form capital gain (retention a portion of net income to reinvest in potential projects to get earnings in the future period).

Others Quantitative Measures: • Profit Margin: Profit margin is also a good indicator for the investor whether they should invest in a company or not. It is a measure of the company’s profitability. Profit margin is calculated as: Profit Margin: Net income Available to common shareholders/ Revenue If the company’s profit margin is high they may give more dividend to the shareholders or they may retain it to reinvest thus capital gain can be obtained by shareholders. So company with high profit margin should be considered as a suitable company to invest.

•

M/B Ratio (Market/ Book Ratio):

The ratio of a stock market price to its book value gives another indication of how investors regard the company. Companies with relatively high rates of return on equity generally sell at higher multiples of book value than those with low. The ratio is calculated as: Market/Book ratio: Market price per share/book value per share Where, Book value per share: Common Equity/ Share outstanding If a company earns a low rate of return on its assets then its M/B ratio will be relatively low whereas company that earns high rate of return on their assets causes their market values to be well in excess of their book values. So invest in those companies with high M/B ratio. • Price/ Cash flow Ratios: Stock price is tied more closely to cash flow rather than net income. Consequently, investors look at the price/ cash flow ratio. The ratio o price per share divided by cash flow per share shows the amount investors will pay for $1 of cash flow. The ratio is measured by: Price/ cash flow: Price per share/ cash flow per share Where, Cash flow per share is calculated as net income plus depreciation and amortization divided by common share outstanding.

Company with high Price/ cash flow ratio is suitable to invest as higher the ratio the better the company position thus higher the stock price.

There are also some quantitative measures along with some ratios and other measure that should we look to before we invest in those company. However, above mentioned ratios and measures are must done before we make investment decisions.

The GAP Inc (GPS) The Gap, Inc. is a global specialty retailer offering apparel, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, banana republic, Piper lime, and Athlete brands. Most of the products sold under its brand names are designed by the Company and manufactured by independent sources. The Company also sells products that are designed and manufactured by branded third parties. The Company operates in two segments: Stores, which includes the results of the retail stores for Gap, Old Navy, and banana republic, and Direct, which includes the results for its online brands, both domestic and international. It has Company-operated stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, China and Italy. The Company also has franchise agreements with unaffiliated franchisees to operate Gap and banana republic stores in many other countries worldwide. In November 2011, the Company announced the launch of its store in Hong Kong.

3 years AGRÂŽ Score

AGR

Overview The Gap Inc. is currently rated asScore: having Average Accounting & Governance Risk (AGR). This Average places them in the 55th percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 45% of companies.

The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk. AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices’.

RISK AGR® IMPACT TOP ISSUE Corporate Governance Events 24.8 Officer: Chairman is also CEO High Risk Events 48.8 Share Repurchases Revenue Recognition 26.4 Operating Revenue/Operating Expense Expense Recognition 0.0 N/A Asset-Liability Valuation 0.0 N/A AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis • Key Ratios 2012; Income Statement - 2012(in Millions) Year

Sales

EBIT

Depreciation

2012

14,197.0

1,816.0

655.0

Total Net EPS Income 1,102.0 1.58

Tax Rate (%) 39.32

Balance Sheet - 2012(in Millions) Year Current Assets

Current Liabilities

Long Debt

2012

3,094.0

0.0

7,985.0

Term Shares Outstanding 676.0 Mil

Ratio Analysis Year

Avg P/E

Price/ Sales

Price/ Book

Net Profit Margin (%)

2012

11.30

0.94

2.64

7.8

Year Book Value/ Debt/ Share Equity

Return on Return on Interest Equity (%) Assets (%) Coverage

2012

22.5

$7.24

0.00

13.8

Cash Flow Ratios

2012

Operating Cash Flow Growth % YOY Free Cash Flow Growth % YOY Cap Ex as a % of Sales Free Cash Flow/Sales % Free Cash Flow/Net Income

36.54 62.49 2.35 11.23 1.45

Liquidity Ratios

2012

Current Ratio Quick Ratio Financial Leverage Debt/Equity

2.19 1.21 1.63 0.01

Efficiency Ratios

2012

Days Sales Outstanding Days Inventory Payables Period Cash Conversion Cycle Receivables Turnover Inventory Turnover Fixed Assets Turnover Asset Turnover

— 64.25 43.12 — — 5.68 5.11 1.83

302.5

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings Despite a growing tax rate over the three years the Earnings before Interest and Tax (EBIT) has been growing which was reflected upon there Earnings per share (EPS).

The price-earnings (P-E) have been decreasing over the three years considered. A lower PE means that the same share of a company's profits will cost a prospective shareholder less. There

are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been increasing significantly during these three years, which has created a positive effect on their ROE and ROA. Due to the recession in 2011, there has been a drop in the free cash Flow / Sales and Free cash Flow / Net Income, but both of these have shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

Wal-Mart Stores Inc. (WMT) Company Description Wal-Mart Stores, Inc. (Wal-Mart) operates retail stores. The Company operates in three business segments: Wal-Mart U.S., Wal-Mart International and Sam's Club. During the fiscal year ended January 31, 2012 (fiscal 2012), the Wal-Mart U.S. segment accounted for 62.1% of its net sales, and operated retail stores in different formats in the United States and Puerto Rico, as well as Wal-Mart’s online retail operations, walmart.com. The International segment consists of retail operations in 14 countries. During fiscal 2011, the segment generated 26.1% of the Company's net sales. The International segment includes different formats of retail stores and restaurants, including discount stores, supercenters and Sam's Clubs that operate outside the United States.

The Sam's Club segment consists of membership warehouse clubs in the United States and Puerto Rico, and the segment's online retail operations, samsclub.com. During fiscal 2012, Sam's Club accounted for 11.8% of its net sales.

3 years AGR® Score

AGR Score: Aggressive

Overview Wal-Mart Stores, Inc. is currently rated as having Aggressive Accounting & Governance Risk (AGR). This places them in the 15th percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 85% of companies.

The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk. AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices’.

RISK AGR® IMPACT TOP ISSUE Corporate Governance Events 31.4 Consecutive quarters of EPS Growth

High Risk Events Revenue Recognition Expense Recognition Asset-Liability Valuation

37.3 0.0 10.0 21.3

Share Repurchases N/A Selling G&A Expenses/Operating Expense Goodwill/Total Assets

AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis • Key Ratios 2012 Income Statement - 2012(in Millions) Year Sales

EBIT

Depreciation Total Income

2012

22,118.

0

7,157.0

408,085.

0

14,449.0

Net EPS Tax Rate (%)

3.73 32.35

Balance Sheet - 2012(in Millions) Year Current Assets

Current Liabilities

Long Debt

2012 170,407.0 Ratio Analysis:

99,939.0

36,401.0

Year Avg P/E Price/ Sales 2012 13.60 0.51 Year Book Value/ Debt/ Share Equity 2012 $18.61 0.59

Price/ Book 2.87 Return Equity (%) 20.5

Term Shares Outstanding 3.8 Bill

Net Profit Margin (%) 3.5 on Return on Assets Interest (%) Coverage 8.5 11.6

Liquidity Ratios

2012

Current Ratio 0.87 Cash Flow Ratios Quick Ratio 0.22 Financial Leverage 2.41 Operating Cash Flow Growth % YOY Debt/Equity 0.51

2012

Free Cash Flow Growth % YOY Cap Ex as a % of Sales Free Cash Flow/Sales % Free Cash Flow/Net Income

20.75 2.98 3.45 0.98

Efficiency Days Sales Outstanding Days Inventory Payables Period Cash Conversion Cycle Receivables Turnover Inventory Turnover Fixed Assets Turnover Asset Turnover

13.40

2012 3.60 40.54 35.52 8.61 101.43 9.00 4.12 2.44

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings Over the three years between the year 2008-2010, Earnings before Interest and Tax (EBIT) has been growing this was reflected upon there Earnings per share (EPS).

The price-earnings (P E) had increased in year 2009 but then again decreased in 2010. A lower PE means that the same share of a company's profits will cost a prospective shareholder less.

There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been increasing significantly during these three years, which has created a positive effect on their ROE and ROA. Due to the recession in 2009, there has been a drop in the Free cash Flow / Sales and Free cash Flow / Net Income, but both of these has shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

American Eagle Outfitters, Inc. (AEO)

Company Description American Eagle Outfitters, Inc. is an apparel and accessories retailer that operates more than 1,000 retail stores in the United States and Canada, and online at ae.com. Through its family of brands, American Eagle Outfitters, Inc. offers clothing, accessories and personal care products.

Its online business, AEO Direct, ships to 76 countries worldwide. The Company operates under the American Eagle, aerie by American Eagle, and 77kids by American Eagle brands. As of January 29, 2012, the Company operated 929 American Eagle Outfitters stores, 148 aerie standalone stores and 9 77kids stores. As of January 29, 2012, it operated 1,086 stores in the United States and Canada under the American Eagle Outfitters, aerie and 77kids brands. During the fiscal year ended January 29, 2012 (fiscal 2012), it opened 34 new stores, consisting of 14 AE stores, 11 aerie stores and nine 77kids stores. On July 31, 2011, it completed the closure of MARTIN+OSA brand stores and its e-commerce operation.

3 years AGR® Score

AGR AGR Score: Score: Average Average Overview

American Eagle Outfitters is currently rated as having Average Accounting & Governance Risk (AGR). This places them in the 77th percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 23% of companies.

The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk. AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices’.

RISK Corporate Governance Events High Risk Events Revenue Recognition

AGR® IMPACT 23.0 41.8 0.0

TOP ISSUE Comp: CEO /CFO Total Comp Share Repurchases N/A

Expense Recognition Asset-Liability Valuation

35.1 0.0

Prepaid Expenses/Operating Expense N/A

AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis • Key Ratios 2012 Income Statement - 2012(in Millions) Year

Sales

EBIT

Depreciation

2012 2,940.27 304.38 137.76 Balance Sheet - 2012(in Millions) Year Current Current Assets Liabilities 2012 2,138.15 559.63 • Ratio Analysis:

Total Net EPS Income 213.4 1.02 Long Debt 0.0

Avg. P/E Price/ Sales Price/ Book Net Profit Margin (%)

2012

14.40

Year Book Share 2012 $7.63

Value/ Debt/ Equity 0.02

2.08

29.89

Term Shares Outstanding 206.8 Mil

Year

1.13

Tax Rate (%)

7.2 Return Equity (%) 13.5

on Return on Assets Interest (%) Coverage 10.0 NA

Cash Flow Ratios

2012

Operating Cash Flow Growth % YOY Free Cash Flow Growth % YOY

27.89 602.81

Cap Ex as a % of Sales

4.26

Free Cash Flow/Sales %

8.66

Free Cash Flow/Net Income

1.53

Liquidity Ratios

2012

Current Ratio Quick Ratio

2.85 1.79

Financial Leverage Debt/Equity

1.35 —

Efficiency Ratios

2012

Days Sales Outstanding Days Inventory Payables Period Cash Conversion Cycle Receivables Turnover Inventory Turnover Fixed Assets Turnover Asset Turnover

4.65 61.88 30.93 35.60 78.47 5.90 4.12 1.46

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings Over the three years between the years 20010-2012, Earnings before Interest and Tax (EBIT) has been, decreasing this was reflected upon there Earnings per share (EPS).

The price-earnings (P E) have been stabled throughout these three years between 2010-2012. A lower PE means that the same share of a company's profits will cost a prospective shareholder less. There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been decreasing significantly during these three years which has created a negative impact on their ROE and ROA. Due to the recession in 2011 there has been a drastic drop in the free cash Flow / Sales and Free cash Flow / Net Income, but both of these has shown significant growth in the following year.

Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

DELL Inc. (NASDAQ: DELL) Company Overview Dell Inc. (Dell) designs, develops, manufactures, markets, and supports information technology systems. The company's product portfolio includes laptops, desktops, workstations, storage devices and printers. Dell also provides a range of consulting services to enhance the energy efficiency of data centers such as capacity planning, data center optimization assessments, virtualization and energy efficiency research for maximizing the value. Dell markets its products and services across the world through a wide network of sales representatives, indirect sales channels, telephone-based sales and online sales. Moreover, it retails its merchandise directly to customers through telephone orders and website. The company caters to healthcare, education, large corporate, government, individual consumers and small businesses. The company has advanced manufacturing facilities across the world, which provides assembly, software

installation, functional testing and quality control operations. The company serves its products to customers across 195 countries. Dell is headquartered at Round Rock in Texas, the US. 3 years AGR® Score

AGR Score: Aggressive Overview Dell Inc. is currently rated as having Aggressive Accounting & Governance Risk (AGR). This places them in the 11st percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 89% of companies.

The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk. AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices’.

RISK Corporate Governance Events High Risk Events Revenue Recognition Expense Recognition Asset-Liability Valuation

AGR® IMPACT 24.5 28.3 7.7 15.8 23.6

TOP ISSUE Consecutive quarters of EPS Growth Share Repurchases Inventory/Cost of Goods Sold R&D Expense/Operating Expense Long-Term Investments/Assets

AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis • Key Ratios 2012 Income Statement -2012 (in Millions) Year Sales

EBIT

2012

2,024.

52,902.

Depreciation Total Net EPS Income 852.0 1,433.0 0.73

Tax (%) 29.2

Rate

0 0 Balance Sheet - 2012(in Millions) Year Current Assets 2012

Current Liabilities

Long Debt

33,652.0 28,011.0 • Ratio Analysis:

Term Shares Outstanding

3,417.0

2.0 Bil

Year

Avg. P/E

Price/ Sales

Price/ Book

Net Profit Margin (%)

2012

17.60

0.48

4.48

2.7

Year

Book Value/ Share

Debt/ Equity

Return on Return on Interest Equity (%) Assets (%) Coverage

2012

$2.88

0.72

25.4

4.3

Cash Flow Ratios

2012

Operating Cash Flow Growth % YOY

106.23

Free Cash Flow Growth % YOY

143.40

Cap Ex as a % of Sales

0.69

Free Cash Flow/Sales %

6.69

Free Cash Flow/Net Income

2.47

Liquidity Ratios

2012

Current Ratio Quick Ratio

1.28 1.03

Financial Leverage

5.97

Debt/Equity

0.61

Efficiency

2012

Days Sales Outstanding

36.46

Days Inventory

8.02

Payables Period

82.31

13.6

Cash Conversion Cycle

-37.83

Receivables Turnover

10.01

Inventory Turnover

45.51

Fixed Assets Turnover

23.73

Asset Turnover

1.76

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings The trend of growing tax rate over the three years have affected the Earnings before Interest and Tax (EBIT) which had been following a negative trend that was reflected upon there Earnings per share (EPS).

The price-earnings (P-E) have decreased rustically in the year 20010 but increased a little in 2011. A lower PE means that the same share of a company's profits will cost a prospective shareholder less. There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been decreasing significantly during these three years, which has created a negative effect on their ROE and ROA. Due to the recession in 2010, there has been a drop in the free cash Flow / Sales and Free cash Flow / Net Income, but both of these have shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

APPLE INC (NASDAQ: AAPL) Company Overview Apple Inc. (NASDAQ: AAPL) formerly Apple Computer, Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad. The iTunes Store provides music, audio books, iPod games, music videos, episodes of television programs, and movies that can be downloaded using iTunes on Mac or Windows, and on the iPod touch and the iPhone. The company's bestknown hardware products include the Macintosh line of personal computers, the iPod line of portable media players, and the iPhone.

3 years AGR速 Score

AGR AGR Score: Score: Very Very Aggressive Aggressive Overview Apple Inc. is currently rated as having Very Aggressive Accounting & Governance Risk (AGR).

This places them in the 3rd percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 97% of companies.

The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk. AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices’.

RISK

AGR® IMPACT Governance 41.7

Corporate Events High Risk Events Revenue Recognition Expense Recognition

6.2 21.7 21.5

Asset-Liability Valuation

9.0

TOP ISSUE Litigation: Other Regulatory Mergers-Acquisitions Unearned Revenue Long-Term/Revenue Deferred Income Tax Assets Current/Operating Exp Intangible Assets/Assets

AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis • Key Ratios 2012 Income Statement - 2012(in Millions) Year

Sales

EBIT

Depreciation

2012

65,225.0

18,540.0

884.0

Total Net EPS Income 14,013.0 15.15

Tax Rate (%) 24.42

Balance Sheet - 2012(in Millions) Year Current Current Assets Liabilities 2012 75,183.0 27,392.0 • Ratio Analysis: Year Avg P/E Price/ Sales

Price/ Book

Net Profit Margin (%)

2012

5.60

21.5

15.10

4.14

Long Debt 0.0

Term Shares Outstanding 916.0 Mil

Year

Book Value/ Debt/ Share Equity

Return on Return on Interest Equity (%) Assets (%) Coverage

2012

$52.18

29.3

0.00

18.6

Cash Flow Ratios

2012

Operating Cash Flow Growth % YOY Free Cash Flow Growth % YOY

83.04 84.03

Cap Ex as a % of Sales

3.07

Free Cash Flow/Sales %

25.44

Free Cash Flow/Net Income

1.18

Liquidity Ratios

2012

Current Ratio

2.01

Quick Ratio

1.72

Financial Leverage

1.57

Debt/Equity

—

Efficiency Ratios

2012

Days Sales Outstanding

24.82

Days Inventory

6.95

Payables Period

81.31

Cash Conversion Cycle

-49.53

NA

Receivables Turnover

14.71

Inventory Turnover

52.51

Fixed Assets Turnover

16.89

Asset Turnover

1.06

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings Despite a growing tax rate over the three years the Earnings before Interest and Tax (EBIT) has been growing which was reflected upon there Earnings per share (EPS).

The price-earnings (P-E) have been decreasing over the three years considered. A lower PE means that the same share of a company's profits will cost a prospective shareholder less. There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been increasing significantly during these three years, which has created a positive effect on their ROE and ROA. Due to the recession in 2010, there has been a drop in the free cash Flow / Sales and Free cash Flow / Net Income, but both of these have shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

Microsoft Corporation (MSFT) Microsoft Corporation, incorporated in 1981, is engaged in developing, licensing and supporting a range of software products and services. The Company’s products include operating systems for personal computers (PCs), servers, phones, and other intelligent devices; server applications for distributed computing environments; productivity applications; business solution applications; desktop and server management tools; software development tools; video games, and online advertising. The Company also offers cloud-based solutions that provide customers with software, services and content over the Internet by way of shared computing resources located in centralized data centers. Cloud revenue is earned primarily from usage fees and advertising. Its cloud-based computing services include Bing, Windows Live Essentials suite, Xbox LIVE service, Microsoft Office 365, Microsoft Dynamics CRM Online customer relationship management services. The Company does business worldwide and has offices in more than 100 countries. In October 2011, the Company acquired Skype Global S.a r.l. In November 2011, it acquired Video Surf Inc. 3 years AGRŽ Score

AGR Score: Aggressive Overview Microsoft Corporation is currently rated as having Aggressive Accounting & Governance Risk (AGR). This places them in the 26th percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 74% of companies.

The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk. AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices’.

RISK Corporate Governance Events High Risk Events Revenue Recognition Expense Recognition Asset-Liability Valuation

AGR® IMPACT 17.5 40.7 41.8 0.0 0.0

TOP ISSUE Consecutive quarters of EPS Growth Share Repurchases Unearned Revenue Long-Term/Revenue N/A N/A

AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis • Key Ratios 2012 Income Statement-2012(in Millions) Year Sales

EBIT

2012

25,013.

0

62,484.

0

Depreciation Total Income 2,507.0 18,760.0

Balance Sheet - 2012(in Millions)

Net EPS Tax (%) 2.1 25.0

Rate

Year Current Current Assets Liabilities 2012 86,113.0 39,938.0 • Ratio Analysis: Year

Avg. P/E

Long Debt 4,939.0

Price/ Sales

Term Shares Outstanding 8.7 Bil

Price/ Book

Net Profit Margin (%)

2012 15.10 4.14 Year Book Value/ Debt/ Share Equity

5.60 21.5 Return on Return on Interest Equity (%) Assets (%) Coverage

2012

29.3

$52.18

0.00

18.6

Cash Flow Ratios

2012

Operating Cash Flow Growth % YOY

26.45

Free Cash Flow Growth % YOY

38.81

Cap Ex as a % of Sales

3.16

Free Cash Flow/Sales %

35.36

Free Cash Flow/Net Income

1.18

Liquidity Ratios

2012

Current Ratio

2.13

Quick Ratio

1.90

Financial Leverage

1.86

Debt/Equity

0.11

Efficiency Ratios

2012

Days Sales Outstanding

70.70

Days Inventory

21.45

Payables Period

108.20

Cash Conversion Cycle

-16.05

Receivables Turnover

5.16

Inventory Turnover

17.01

NA

Fixed Assets Turnover

8.24

Asset Turnover

0.76

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings Despite a stable tax rate over the three years the Earnings before Interest and Tax (EBIT) has been growing which was reflected upon there Earnings per share (EPS).

The price-earnings (P-E) have been decreasing over the three years considered. A lower PE means that the same share of a company's profits will cost a prospective shareholder less. There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been increasing significantly during these three years, which has created a positive effect on their ROE and ROA. Due to the recession in 2009, there has been a drop in the free cash Flow / Sales and Free cash Flow / Net Income, but both of these have shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

CITIGROUP INC. (NYSE: C) Company Description Citigroup Inc. (Citigroup) is a global diversified financial services holding company. Citigroup businesses provide consumers, corporations, governments and institutions with a range of financial products and services. As of December 31, 2010, the Company had approximately 200 million customer accounts and did business in more than 160 countries and jurisdictions.

Citigroup operates two primary business segments: Citicorp, consisting of its Regional Consumer Banking (RCB) businesses and Institutional Clients Group (ICG), and Citi Holdings, consisting of its Brokerage and Asset Management (BAM), Local Consumer Lending (LCL), and Special Asset Pool (SAP). On February 1, 2011, Citigroup acquired Maltby Acquisitions Limited (Maltby).

3 years AGR速 Score

AGR AGR Score: Score: Aggressive Aggressive

Overview Citigroup Inc. is currently rated as having Aggressive Accounting & Governance Risk (AGR).

This places them in the 25th percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 75% of companies.

The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk. AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices’.

RISK AGR® IMPACT TOP ISSUE Corporate Governance Events 0.0 N/A High Risk Events 14.6 Divestitures Revenue Recognition 71.2 Loan Interest & Fees/Net Loans Expense Recognition 0.0 N/A Asset-Liability Valuation 14.3 Leverage Ratio: Debt/Equity AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis • 3 Years Summary of Key Ratios: Income Statement - 2012(in Millions) Year

Sales

EBIT

2012

0.0

13,184.0

Depreciation

Total Income

2,664.0

10,622.0

Net EPS 3.55

Tax (%)

Rate

16.94

Balance Sheet - 2012(in Millions) Year Current Assets 2012

Current Liabilities

Long Debt

1,913,902.0 1,750,434.0 • Ratio Analysis:

Term Shares Outstanding

362,983.0

2.9 Bil

Year

Avg P/E

Price/ Sales

Price/ Book

Net Profit Margin (%)

2012

11.30

1.26

0.84

13.2

Year 2012

Book Value/ Debt/ Share Equity $56.26 3.80

Return Equity (%) 6.5

on Return Assets (%) 0.6

on Interest Coverage 1.5

Cash Flow Ratios

2012

Operating Cash Flow Growth % YOY

—

Free Cash Flow Growth % YOY

—

Cap Ex as a % of Sales

2.73

Free Cash Flow/Sales %

-0.19

Free Cash Flow/Net Income

-0.02

Liquidity Ratios

2012

Current Ratio

—

Quick Ratio

—

Financial Leverage

11.73

Debt/Equity

2.34

Efficiency Ratios

2012

Days Sales Outstanding Days Inventory Payables Period Cash Conversion Cycle Receivables Turnover Inventory Turnover Fixed Assets Turnover Asset Turnover

— — — — — — — 0.05

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings Despite an increasing tax rate over the three years the Earnings before Interest and Tax (EBIT) has changed into a positive figure which was reflected upon there Earnings per share (EPS).

The price-earnings (P-E) have been changed from negative to positive over the three years considered. A lower PE means that the same share of a company's profits will cost a prospective

shareholder less. There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been increased significantly from a negative figure during these three years, which has created a positive effect on their ROE and ROA. Due to the recession in 2009, there has been a drop in the Free cash Flow / Sales and Free cash Flow / Net Income, but both of these has shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

HSBC Holdings PLC (HBC) Company Description HSBC Holdings plc (HSBC) is a global banking and financial services organizations. As of December 31, 2010, it provided a range of financial services to around 95 million customers through two customer groups, Personal Financial Services (PFS), including consumer finance, and Commercial Banking (CMB), and two global businesses, Global Banking and Markets (GB&M), and Global Private Banking (GPB). Its international network covers 87 countries and territories in six geographical regions; Europe, Hong Kong, Rest of Asia-Pacific, the Middle East, North America and Latin America. As of December 31, 2010, the Company had an international network of some 7,500 offices in 87 countries and territories in six geographical regions; Europe, Hong Kong, Rest of Asia-Pacific, the Middle East, North America and Latin America. PFS incorporates the Company's consumer finance businesses, which include HSBC Finance Corporation (HSBC Finance).

3 years AGR® Score Overview HSBC Holdings plc (ADR) is currently rated as having Aggressive Accounting & Governance Risk (AGR), receiving an AGR Score of 49 out of a possible 100. The company is also rated as having Average Financial Condition.

The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk. AGR Impact shows the deductions from a perfect 100 AGR score due to flagged metrics.

RISK AGR® IMPACT TOP ISSUE Revenue Recognition -11.0 Operating Income Expense Recognition -7.1 Current Expenses Asset-Liability Valuation -6.8 Pension Accounting High Risk Events -21.2 Organizational Structure Governance -4.9 Management Issues AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis •

Key Ratios 2012

Income Statement - 2012(in Millions)

Year

Sales

EBIT

Depreciation

2012

0.0

19,037.0

2,744.0

Total Net EPS Income 13,159.0 0.72

Tax Rate (%) 25.46

Balance Sheet - 2012(in Millions) Year Current Current Assets Liabilities 2012 2,454,689.0 2,307,022.0 • Ratio Analysis: Year Avg P/E Price/ Sales 2012 70.80 Year Book Value/ Share 2012 $41.75

9.63 Debt/ Equity 1.21

Long Debt 33,387.0 Price/ Book

Term Shares Outstanding 17.7 Bil Net Profit Margin (%)

1.22 21.8 Return on Return on Interest Equity (%) Assets (%) Coverage 8.9 0.5 2.0

Cash Flow Ratios Operating Cash Flow Growth % YOY

2012 708.09

Free Cash Flow Growth % YOY

—

Cap Ex as a % of Sales

3.17

Free Cash Flow/Sales %

-7.76

Free Cash Flow/Net Income

-0.47

Liquidity Ratios

2012

Current Ratio

—

Quick Ratio

—

Financial Leverage

16.62

Debt/Equity

1.81

Efficiency Days Sales Outstanding Days Inventory Payables Period Cash Conversion Cycle Receivables Turnover Inventory Turnover Fixed Assets Turnover

2012 — — — — — — 6.32

Asset Turnover

0.03

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings With the help of a decreasing tax rate over the three years the Earnings before Interest and Tax (EBIT) has increased in a decent manner which was reflected upon there Earnings per share (EPS).

The price-earnings (P-E) have been decreased drastically over the three years considered. A lower PE means that the same share of a company's profits will cost a prospective shareholder less. There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been increased significantly during these three years which has created a positive effect on their ROE and ROA. Due to the recession in 2009 there has been a drop in the free cash Flow / Sales and Free cash Flow / Net Income, but both of these have shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

3M Co (NYSE: MMM) Company Description 3M Company (3M) is a diversified technology company with a presence in industrial and transportation; health care; display and graphics; consumer and office; safety, security and protection services, and electro and communications. 3M manages its operations in six operating business segments: industrial and transportation; health care; display and graphics; consumer and office; safety, security and protection services, and electro and communications.

3M products are sold through numerous distribution channels. In February 2011, 3M (industrial and transportation business) announced that it completed its acquisition of the tape-related assets of Alpha Beta Enterprise Co. Ltd. In February 2011, it acquired Hybrivet Systems Inc. In April 2011, it acquired Original Wraps Inc. In July 2011, it acquired Advanced Chemistry & Technology Inc. In October 2011, the Company acquired do-it-yourself and professional business of GPI Group.

3 years AGR速 Score

AGR AGR Score: Score: Very Very Aggressive Aggressive

Overview 3M Company is currently rated as having Very Aggressive Accounting & Governance Risk (AGR). This places them in the 4th percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 96% of companies. The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk.

AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices.

RISK Corporate Governance Events High Risk Events Revenue Recognition Expense Recognition Asset-Liability Valuation

AGR® IMPACT 37.5 14.3 14.0 6.7 27.6

TOP ISSUE Litigation: Other Regulatory Share Repurchases Operating Revenue/Operating Expense Cost of Goods Sold/Revenue Goodwill/Total Assets

AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis • Key Ratios 2012 Income Statement - 2012(in Millions) Year Sales EBIT Depreciation 2012

26,662.0

5,755.0

1,120.0

Total Net EPS Income 4,085.0 5.63

Tax Rate (%) 27.66

Balance Sheet - 2012(in Millions) Year Current Current Assets Liabilities 2012 30,156.0 14,493.0 • Ratio Analysis: Year Avg P/E Price/ Sales

Price/ Book

Net Profit Margin (%)

2012

3.92

15.3

14.80

2.35

Long Debt 4,277.0

Term Shares Outstanding 712.0 Mil

Year Book Value/ Debt/ Share Equity

Return on Return on Interest Equity (%) Assets (%) Coverage

2012

26.1

$22.00

0.35

Cash Flow Ratios Operating Cash Flow Growth % YOY Free Cash Flow Growth % YOY

13.5 2012 4.72 1.11

29.4

Cap Ex as a % of Sales Free Cash Flow/Sales % Free Cash Flow/Net Income

4.09 15.31 1.00

Liquidity Ratios

2012

Current Ratio

2.01

Quick Ratio

1.34

Financial Leverage

1.93

Debt/Equity

0.27

Efficiency Ratios

2012

Days Sales Outstanding Days Inventory

46.99 76.45

Payables Period Cash Conversion Cycle Receivables Turnover

41.10 82.34 7.77

Inventory Turnover Fixed Assets Turnover Asset Turnover

4.77 3.73 0.93

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings Though the tax rate has been decreased over the three years the Earnings before Interest and Tax (EBIT) had not increased in a decent manner which was reflected upon there Earnings per share (EPS). The price-earnings (P-E) have been remained constant over the three years considered. A lower PE means that the same share of a company's profits will cost a prospective shareholder less. There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings. Moreover, their Net Profit Margin has been increased significantly during these three years, which has created a positive effect on their ROE and ROA. Due to the recession in 2009, there has been a drop in the free cash Flow / Sales and Free cash Flow / Net Income, but both of these have shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

The Boeing Co (BA)

Company Description The Boeing Company (Boeing) is an aerospace company. Boeing is engaged in the design, development, manufacture, sale and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services.

The Company operates in five segments: Commercial Airplanes, Boeing Military Aircraft (BMA), Network & Space Systems (N&SS), Global Services & Support (GS&S), and Boeing Capital Corporation (BCC). Boeing's Other segment includes the activities of engineering, operations and technology (EO&T), and shared services group (SSG), as well as intercompany guarantees provided to BCC. In July 2010, the Company acquired Narus, which is a provider of network traffic and analytics software. On August 5, 2010, the Company acquired Argon ST, Inc. (Argon). In December 2010, Boeing completed the acquisition of the business and operations conducted by Summit Aeronautics Group in Helena, Montana.

3 years AGR® Score

AGR Score: Aggressive Overview The Boeing Company is currently rated as having Aggressive Accounting & Governance Risk (AGR). This places them in the 20th percentile among all companies, indicating higher Accounting & Governance Risk (AGR) than 80% of companies. The forensic risk summary table below highlights materials risks, if any, and lists the most critical business issue for each risk.

AGR Impact shows the deductions from a perfect 100 AGR score due to flagged matrices’.

RISK

AGR® IMPACT Governance 21.1

Corporate Events High Risk Events Revenue Recognition Expense Recognition Asset-Liability Valuation

14.7 29.2 7.7 27.2

TOP ISSUE Officer: Chairman is also CEO Mergers-Acquisitions Inventory/Cost of Goods Sold Selling G&A Expenses/Operating Expense Underfunded Pension Benefit Liability/Revenue

AGR scores are based on statistical analysis of accounting and governance risk factors. Lower scores indicate heightened corporate integrity risk, indicating an increased likelihood of future class action litigation, material financial restatements or impaired equity performance.

Financial Analysis •

Key Ratios 2012

Income Statement – 2012 (in Millions) Year

Sales

EBIT

Depreciation

2012

64,306.0

4,507.0

1,313.0

Total Net EPS Income 3,311.0 4.45

Tax Rate (%) 26.54

Balance Sheet – 2012 (in Millions) Year Current Current Assets Liabilities 2012 68,565.0 65,799.0 • Ratio Analysis: Year

Avg P/E

2012 14.90 Year Book Share 2012 $3.76

Price/ Sales

0.76 Value/ Debt/ Equity 4.49

Long Debt 11,473.0 Price/ Book

Term Shares Outstanding 735.3 Mil Net Profit Margin (%)

17.35 5.1 Return on Equity Return on Assets Interest (%) (%) Coverage 119.7 4.8 9.6

Cash Flow Ratios

2012

Operating Cash Flow Growth % YOY Free Cash Flow Growth % YOY

-47.31 -58.64

Cap Ex as a % of Sales

1.75

Free Cash Flow/Sales %

2.84

Free Cash Flow/Net Income

0.55

Liquidity Ratios Current Ratio Quick Ratio Financial Leverage Debt/Equity

2012 1.15 0.45 24.79 4.15

Efficiency Ratios

2012

Days Sales Outstanding Days Inventory Payables Period Cash Conversion Cycle Receivables Turnover Inventory Turnover Fixed Assets Turnover Asset Turnover

31.81 145.21 52.14 124.88 11.48 2.51 7.26 0.98

Financial data in U.S. Dollars Values in Millions (Except for per share items) Summary of the Findings With the help of a decreasing tax rate over the three years the Earnings before Interest and Tax (EBIT) has increased in a decent manner, which was reflected upon there Earnings per share (EPS).

The price-earnings (P-E) have been decreased in the year 2009 but increased a little in 2010. A lower PE means that the same share of a company's profits will cost a prospective shareholder less. There are usually reasons for a lower PE. It may reflect slower expected earnings growth, or higher risk earnings.

Moreover, their Net Profit Margin has been increased significantly during these three years, which has created a positive effect on their ROE and ROA. Due to the recession in 2009, there has been a drop in the free cash Flow / Sales and Free cash Flow / Net Income, but both of these have shown significant growth in the following year. Based upon this we can state that there has been an improvement in the flow of free cash flow in the economy and it can be expected to rise hereon.

FOOD CONSUMER PRODUCTS Industry

PepsiCo Inc. is an American multinational corporation headquartered in purchase, New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which include an acquisition of Tropicana in 1998 and a merger with Quaker Oats in 2001 which added the Gatorade brand to its portfolio as well.

As of 2009, 19 of PepsiCo's product lines generated retail sales of more than $1 billion each, and the company’s products were distributed across more than 200 countries, resulting in annual net

revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food & beverage business in the world. Within North America, PepsiCo is ranked (by net revenue) as the largest food and beverage business.

Current ratio Ratio

Actual 2012

Current ratio 0.851 times

Industry average 2012 1.236 times

Interpretation: In the year 2012, the PepsiCo, Inc. Company’s current asset was 0.851 times more than its current liabilities. From the time series, analysis a decreasing of the current ratio can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also below the industry average. Therefore, the current ratio of the company is good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 the current asset was decreased, but the current liability increased more. That is why the ratio decreased.

Net working capital Ratio

Actual 2012

Net working -$6135 capital

Industry average 2012 $164.26

Interpretation: In the year 2012, the PepsiCo, Inc Company’s net working capital was -$6135. That means they had any other sources for their investment. From the time series, analysis a decreasing of the net working capital can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also below the industry average. Therefore, the net working capital of the company is not good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 both the current asset was decreased, but the current liability was increased more. That is why the ratio decreased.

Quick ratio Ratio

Actual 2012

Quick ratio

0.851times

Industry average 2012 0.70931times

Interpretation: In the year 2012, PepsiCo, Inc Company’s Quick ratio was 0.851 times. From the time series analysis a decreasing of the Quick ratio can be seen from 2011to 2012 which is not good for this company. In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the Quick ratio of the company is not bad. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 both the current asset was decreased, but both the inventory and current liability increased. That is why the ratio decreased.

Cash flow to total debt: Ratio

Actual 2012

Current ratio 0.342

Industry average 2012 0.3577

Interpretation: In the year 2012, the PepsiCo, Inc Company’s cash flow to total debt was 0.342.From the time series analysis, it can be seen from 2011 to 2012 the cash flow to total debt was not changed very much. In addition, from the cross sectional analysis it is observed that the ratio is also same the industry average. Therefore, this ratio of the company is not bad. The reason behind this small decreasing in the ratio is, from the year 2011 to 2012 both the current liability was increased.

Cash flow from operations Ratio

Actual 2012

Cash flow 42,286 from operations

Industry average 2012 20,774

Interpretation: In the year 2012, the PepsiCo, Inc Company’s cash flow from operation was 42,286 times more than its current liabilities. From the time series, analysis a decreasing of the cash flow from operation can be seen from 2011 to 2012. However, from the cross sectional analysis it is observed that the ratio is above the industry average. Therefore, the ratio of the company is good.

The reason behind this decreasing in the ratio is, from the year 2011 to 2012 both the cash flow from operation and current liability was increased.

Net liquid balance

Ratio Return equity

Actual 2012 on 6,563

Industry average 2012 3,212

Interpretation: In the year 2012, the PepsiCo, Inc Company’s net liquid balance was $6,563.From the time series analysis a increasing of the ratio can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the ratio of the company is very good. The reason behind this increasing in the ratio is, from the year 2011 to 2012 the short term investment was increased.

Return on equity Ratio Return equity

Actual 2012 on 0.186

Industry average 2012 0.656

Interpretation: In the year 2012, the PepsiCo, Inc Company’s net income was 0.186 times more than its share holder’s equity. From the time series analysis a decreasing of the ratio can be seen from 20101to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also below the industry average. Therefore, the ratio of the company is not good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 the net income was decreased and the share holder’s equity was increased.

Return on asset Ratio Return asset

Actual 2012 on 0.089

Industry average 2012 0.263

Interpretation: In the year 2012, the PepsiCo, Inc Company’s net income was 0.089 times more than its total asset. From the time series, analysis a decreasing ratio can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also below the industry average. Therefore, the ratio of the company is not good. The reason behind this decreasing in

the ratio is, from the year 2011to 2012 both the net income was decreased but the total asset was increased.

Profit margin Ratio

Actual 2012

Return Kraft FoodsonInc.0.098 equity Current Ratio Industry Average

Industry average 2012 0.634 2012 1.08 1.29

Interpretation: In the year 2012, the Time Warner Cable Company’s net income was 0.098 times more than its revenues. From the time series, analysis a decreasing of the ratio can be seen from 2011 to 2012.

In addition, from the cross sectional analysis it is observed that the ratio is also below the industry average. Therefore, the ratio of the company is not good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 the revenues was increased more than net income.

Kraft Foods Inc. is a company with many different roots and founders, all sharing a commitment to quality, a willingness to take risks and a spirit of innovation. Among the products now sold by Kraft Foods Inc. are so many “firsts” and innovations that a history of the company is almost a history of the food industry. Kraft traces its history to three of the most successful food entrepreneurs of the late 19th and early 20th centuries — J.L. Kraft, who started his cheese business in 1903; C.W. Post, who founded Possum Cereal Company (later renamed General Foods Corporation) in 1895; and Oscar Mayer, who began his meat.

We have a simple vision of making today delicious a part of every business decision at Kraft Foods. Each one of our employees has the opportunity to affect change, working with our suppliers, customers and consumers to create a safer, more sustainable and delicious community.

We understand that actions speak louder than words.

Current Ratio Time Series Analysis: Current ratio may be defined as the relationship between current assets and current liabilities.

This ratio is also known as "working capital ratio". It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the current liabilities. It represents the margin of safety or cushion available to the creditors. It is an index of the firm’s financial stability. It is also an index of technical solvency and an index of the strength of working capital.

From the table we can see that the ratio increased from 1.04 to 1.08 between 2011 & 2012. An

increase in the current ratio represents improvement in the liquidity position of the firm.

Therefore, we can conclude that the liquidity position improved from 2011 to 2012.

Cross Sectional Analysis: Now comparing with the industry average, we can see that, in 2011 Kraft’s current ratio was greater than the industry average, which is a sign of good performance compare to industry.

However, in 2012, the industry average is much higher than Kraft’s current ratio. This means that in this year Kraft Food’s performance was not better than the industry average.

Net Working Capital Kraft Foods Inc. Net Working Capital Industry Average

2012 963 164

Time Series Analysis: This ratio is a measure of both company's efficiency and its short-term financial health. Positive working capital means that the company is able to pay off its short-term liabilities. Now from the table we can see that in 2011, it was $561 million but it increased a huge amount to $963 million in 2012. A company increases its net working capital for a variety of reasons, such as investing more money in its business or selling products for a profit. It is a good sign when this ratio increases; it means the company able to pay its short term liabilities much better in 2012.

Cross Sectional Analysis: Now on comparing with the industry average we can see that, the industry did better than Kraft in 2011 however, in 2012 the net working capital for Kraft was much higher compare to the industry average, which is only $164 million. This is because working capital of other related companies came negative; so we can say Kraft performed well in 2012 than the industry.

Quick Ratio Kraft Foods Inc. Quick Ratio Industry Average

2012 0.755 0.711

Time Series Analysis: This ratio is an indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its liquid assets. If this ratio increases, it shows the company is in better position. From the table we can see that the ratio increases from 0.697 to 0.755, which shows the company, improved in meeting its short term obligations with its liquid assets.

Cross Sectional Analysis: On comparing with the industry average, we can say that industry did quite well in 2011 by having 0.719 to Kraft’s 0.697.However in 2012, Kraft overcome it and performed well than the industry by having 0.755.

Cash Flow to Total Debt Kraft Foods Inc. Cash Flow to total Debt Industry Average

2012 1.54 0.70

Time Series Analysis: This coverage ratio compares a company's operating cash flow to its total debt, which for purposes of this ratio, is defined as the sum of short-term borrowings, the current portion of longterm debt and long-term debt. This ratio provides an indication of a company's ability to cover total debt with its yearly cash flow from operations. The higher this ratio, the better is the company's ability to carry its total debt. This ratio increases from 1.359 to 1.54 between 2011 & 2012.This shows Kraft performed well in 2011 than 2010.

Cross Sectional Analysis: On comparing with the industry average, we can say that Kraft performed much better than the industry by having high ratio for both 2011 & 2012, which is a great sign for the company as they performed efficiently in cover total debt.

Cash Flow from Operations Kraft Foods Inc. Cash Flow from operations Industry Average

2012 0.44 0.77

Time Series Analysis: The operating cash flow ratio measures a company's ability to pay its short term liabilities. If the operating cash flow ratio is less than one, it means that the company has generated less cash over the year than it needs to pay off short term liabilities as at the year end. This may signal a need to raise money to meet liabilities. The ratio was high in 2012 than 2011, which was 0.44, but it is still less than one, which means Kraft has generated less cash in both 2011 & 2012.

Cross Sectional Analysis: On comparing with the industry average, we can see that even industry’s ratio is under 1.However the ratio for industry in both 2011 & 2012 was higher compare to Kraft Foods Inc. Net Liquid Balance Kraft Foods Inc. 2012 NLB 2041 Industry Average 3211 Time Series Analysis: This ratio shows the ability of non-spontaneous current assets to cover the non-spontaneous debts. Larger amount is better. In 2011, Kraft Foods has a $ 2116 million current asset to cover its debts however, this amount decreased in 2012 to $2041 million that is not a good sign for the company.

Cross Sectional Analysis: The industry average was much higher for both 2011 & 2012 compare to Kraft Foods Inc.This shows other companies under this industry performed well than Kraft.

Return on Equity Kraft Foods Inc. ROE Industry Average

2012 1.49 0.98

Time Series Analysis: The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. We can see that the company was more profitable in 2012 than 2011 as the ratio increased from 1.37 to 1.49.

Cross Sectional Analysis: From the table we can see that the industry’s situation is not better compare to Kraft Foods INC. Even though the ratio increased from 2011 t 2012, it is still less compare to Kraft Foods Inc. Profit Margin Kraft Foods Inc. Profit Margin Industry Average

2012 1.71 0.64

Time Series Analysis Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Kraft performed well in 2011 by having 2.08; however, the ratio fell in 2012 to 1.71.

Cross Sectional Analysis Compare to the industry average, Kraft Foods Inc. performed well in both 2011 & 2012.Having higher ratio comparing to the industry average shows that it was more profitable and has better control over cost than its competitors.

Return on Assets Kraft Foods Inc. ROA Industry Average

2012 0.58 0.26

Time Series Analysis An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. It tells you what earnings were generated from invested capital (assets).Kraft Foods Inc. performance for 2012 were better compare to 2011 as the ratio increased from 0.52 to 0.58.

Cross Sectional Analysis In both 2011 & 2012, Kraft Foods Inc. performed better than the industry as in both years the ratio for Kraft s higher. The return on asset for industry average decreased in 2012 where as this ratio increased for Kraft Foods Inc.

Established in 1954, General Mills Canada Corporation is based in Mississauga, Ontario. The company is best known for its many quality brands enjoyed by Canadian consumers every day.

The company's flagship General Mills 2012 brand is Cheerios. Additional Current Ratio 1.07 key cereal brands Industry Average 1.29 include Honey Nut Cheerios, Oatmeal Crisp, Nesquik and Lucky Charms. General Mills also makes Betty Crocker, Nature Valley, Pillsbury, Green Giant, Hamburger Helper and Old El Paso* products.

Corporate Sponsorship At General Mills, we believe we have a responsibility to support our community. That's why we are proud sponsors of and contributors to many educational, social, health and cultural programs, including the Heart and Stroke Foundation of Canada, Concerned Children's Advertisers and Dietitians of Canada We are also very committed to helping improve the nutrition and fitness behaviors of families and children. Our Champions for Healthy Kids Grant program is just one way we are supporting organizations that promote active, healthy lifestyles to Canadian youth.

Current Ratio Time Series Analysis: In 2011, the ratio was 0.92 however; it increased in 2012 to 1.07, which is a good indicator for the company. It shows the improvement o the liquidity position of the company.

Cross Sectional Analysis: The industry’s performance is much better compare to General Mills as the ratio for both 2011& 2012 was higher. The industry performed well in 2012 as it increased compare to 2011.

Net Working Capital General Mills 2012 Networking Capital 242.8 Industry Average 164 Time Series Analysis: A negative working capital is a sign of managerial efficiency in a business with low inventory and accounts receivable. General Mills generated cash so quickly they actually have a negative working capital in 2011, which is -$289.1 million. However, in 2012 it increased to 242.8 Cross Sectional Analysis: Looking at the table, we can see that the industry average for both 2011 & 2012 was high compare to General Mills. It shows General Mills performed better than its competitors did.

Quick Ratio

General Mills Quick Ratio Industry Average

2012 0.63 0.711

Time Series Analysis: It shows the short term liquidity of a company. The higher the ratio the better liquidity position a company has. In 2011, the ratio was 0.57 however; it increased in 2012 by 0.63.

Cross Sectional Analysis: Industry has been performing better for both 2011 & 2012.Even though the ratio decreased in 2012.It shows the competitors of General Mills are in better liquidity position.

Cash Flow to Total Debt General Mills Cash Flow to total Debt Industry Average

2012 0.22 0.70

Time Series Analysis: Rate indicates a company's ability to satisfy its debts. It is useful in predicting bankruptcy. The ratio equals cash flow from operations divided by total liabilities. The ratio increased from 0.17 to 0.22 between 2011 and 2012, which is a positive sign showing the company is in a less risky financial position and better able to pay its debt load.

Cross Sectional Analysis: On comparing to the industry average, we can see than the industry is in better position than General Mills. In 2011, the ratio was 0.63, which then increased in 2012 to 0.70.

Cash Flow from Operations General Mills Cash Flow from operations Industry Average

2012 0.42 0.77

Time Series Analysis: It shows the cash that is generated from operations, the more the ratio the better position a company is. In 2011, the ratio was 0.58, which then decreases to 0.42.General Mills performed better in 2011.

Cross Sectional Analysis: The ratio of industry average was greater for both 2011 & 2012 that is the competitors are performing better than General Mills. This is an alarming scenario for General Mills; it shows that General Mills is operating less cash compare to its competitors.

Net Liquid Balance General Mills NLB Industry Average Time Series Analysis:

2012 -411.7 3211

This ratio shows the ability of non-spontaneous current assets to cover the non-spontaneous debts. Larger amount is better. In 2011, the ratio was $565.9 million but it fell drastically in 2012 to -$411.7. The negative amount shows a dependence on short term external sources.

Cross Sectional Analysis: In 2011, the industry average was $2515 million, which is less compare to General Mills. It shows General Mills successfully cover their non-spontaneous debt with their non-spontaneous assets. However in 2012, the ratio increased to $3211 million whereas the ration the negative in 2012.Therefore we can conclude that General Mill’s performance fell dramatically.

Return on Equity General Mills 2012 ROE 0.283 Industry Average 0.98 Time Series Analysis: The amount of net income returned as a percentage of shareholders equity. From the table we can see that the ratio was almost stable for both 2011 & 2012.

Cross Sectional Analysis: General Mills performance is not so satisfactory compare to its industry average. In 2011, the ratio was 0.62, which then increased to 0.98.

Profit Margin General Mills 2012 Profit Margin 0.12 Industry Average 0.64 Time Series Analysis: Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. The ratio increased slightly from 0.10 to 0.12, which shows a little bit of improvement.

Cross Sectional Analysis: Comparing to the industry we can conclude that industry is doing much better. The competitors has better control over cost compare to General Mills.

Return on Assets General Mills 2012 ROA 0.096 Industry Average 0.26 Time Series Analysis: An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Here we can see that the ratio is very low which a very alarming indicator is for General Mills.

Cross Sectional Analysis: Industry is doing better compare to General Mills. The ratio was 0.35 in 2011, which then decreased to 0.26.

Pharmaceuticals industry

Johnson & Johnson is an American multinational pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886. Its common stock is a component of the Dow Jones Industrial Average and the company is listed among the Fortune 500.Johnson & Johnson consistently ranks at the top of Interactive National Corporate Reputation Survey, ranking as the world's most respected company by Barron's Magazine, and was the first corporation awarded the Benjamin Franklin Award for Public Diplomacy by the U.S. State Department for its funding of international education programs. A suit brought by the United States Department of Justice in 2010, however, alleges that the company from 1999 to 2004 illegally marketed drugs including antipsychotics to Omnicare, a pharmacy that dispenses the drugs in nursing homes. Johnson & Johnson responded that the payments were lawful and appropriate. The corporation's headquarters is located in New Brunswick, New Jersey, United States with the consumer division being located in Skillman, New Jersey. The corporation includes some 250 subsidiary companies with operations in over 57 countries and products sold in over 175 countries. Johnson & Johnson had worldwide pharmaceutical sales of $65 billion for the calendar year of 2011. Johnson & Johnson's brands include numerous household names of medications and first aid supplies. Among its well-known consumer products are the BandAid Brand line of bandages, Tylenol medications, Johnson's baby products, Neutrogena skin and beauty products, Clean & Clear facial wash and Cuvee contact lenses.

Current Ratio: Current Ratio is the ratio of current assets to current liabilities. The current ratio indicates the ability of a company to pay its current liabilities from current assets and shows the strength of the company’s working capital position. Current ratio of 2011 is considered a healthy condition for most businesses according to benchmark. The current ratio was 0.490 in 2011 and 0.598 in 2012. In both the years their performance was good and also in respect to trend, they have an improving trend from 2011 to 2012.Comparing to industry average 1.96 in 2011 and 1.97 in 2012, the company is doing better result and well above the industry average.

Quick Ratio: The Acid-test or quick ratio measures a company's ability to meet its short-term obligations with its liquid assets. Inventories typically are the least liquid of a firm’s current assets; they are the assets on which require more time to be sold and losses are most likely to occur in the event of liquidation. Therefore, it is important to measure the firm’s ability to pay off short term obligations without having to rely on the sale of inventories. Quick ratio of 1:1 is considered a healthy condition for most businesses. The current ratio was 0.490 in 2011 and 0.598 in 2012. In both the years, their performance was good and in respect to trend, they have an improving trend from 2011 to 2012. From both of the current and quick ratio, it is implied that, they have a very good liquidity condition, which indicates a very good working capital position. Comparing to industry average 1.62 in 2011 and 1.65 in 2012, the company is doing better result and well above the industry average.

Net Working Capital: Net Working Capital is a measurement of the operating liquidity available for a company to use in developing and growing its business. If a company's current assets do not exceed its current

liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. A declining working capital ratio over a longer time could also be a red flag that warrants further analysis. Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable and inventory).

The net working capital was USD 31, 235 million in 2011 and decreased to USD -14000 million in 2012. Therefore, the overall position of net working capital over the year is not improved.

Comparing to industry average USD 19,639 million in 2011 and USD-24000 million in 2012, the company is doing worse result and bad result of the industry average.

Cash Flow to Total Debt: This ratio compares a company's operating cash flow to its total debt, which for purposes of this ratio, is defined as the sum of short-term borrowings, the current portion of long-term debt and long-term debt. This ratio provides an indication of a company's ability to cover total debt with its yearly cash flow from operations. In calculation of cash flow to total debt, the higher the percentage of the ratio, the better the company's ability to carry its total debt. The cash flow to total debt was decreased from 63% in 2011 to 44% in 2012. Due to the decrease in net income in 2012 compared to 2011, the cash flow was decreased in 2011. As a result, the cash flow to total debt was decreased. Comparing to industry average 36% in 2011 and 33% in 2012, the company is doing better result and well above the industry average.

Net Liquid Balance: This ratio shows the ability of non-spontaneous current assets to cover the non-spontaneous debts. Larger amount is better. The net liquid balance was USD 11,725 million in 2011 and increased to USD 17,268 million in 2012. The net liquid balance is improved because of an increase in cash in 2011 compared to the cash standing in 2011.Comparing to industry average USD 12,288 million in 2011 and USD 14,614 million in 2012, the company is doing a little lower in 2011 but again went to high from the industry average in 2012.

Cash flow from operations: The amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities. The ratio was decreased from 0.72 in 2011 to 0.67 in 2012. Though they have a decreasing trend from 2010 to 2011, in both the years, their ratio was in a good standing. The company could cover its interest payment without any difficulty.

Net Profit Margin: This ratio indicates the profit of the firm relative to sales. It is a measure of the efficiency of the firm’s operations as well as an indication of how products or services are priced. This is a measure of the firm’s profitability of sales after taking account of all expense and taxes. It tells the firm’s net income per AED of sales. As, it is discusses in cash flow to debt section, that, Johnson & Johnson had a lower net income in 2012 then 2011, their profit margin was also decreased as obvious. It was 22% in 2010 and decreased to 15% in 2011.Comparing to industry average 13.7% in 2011 and 12% in 2012, the company is doing better result and well above the industry average.

Return on Asset: It measures the overall effectiveness in generating profits with available assets; earning power of invested capital. It gives an idea as to how efficient management is at using its assets to generate earnings. The ROA was decreased from 13% in 2011 to 9% in 2012. The overall effectiveness on generating profit from their available assets had a decreasing trend on the period of 2011 to 2012.Comparing to industry average 6.7% in 2011 and 5.6% in 2012; the company is doing better result and well above the industry average.

Return on Equity: The ratio compares net profit with the equity that shareholders have invested in the company.

This ratio tells the earning power on shareholders’ book value investment. It determines the rate of return on the invested capital. It measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested. It is used to compare investment in the company against other investment opportunities, such as stocks, real estate, savings, etc. A high return on equity often reflects the firm’s acceptance of strong investment opportunities and effective expense management. The ROE was decreased from 24% in 2011 to 17% in 2012. Due to the lower net income in 2012, the ROE was also affected by having a decreasing trend from 2011 to 2012.Comparing to industry average 13.1% in 2011 and 11.7% in 2012, the company is doing better result and well above the industry average.

Pfizer, Inc. is an American multinational pharmaceutical corporation founded in 1849. The company is headquartered in Midtown Manhattan, New York City, with its research headquarters in Groton, Connecticut, United States. Pfizer produces Lipitor (atorvastatin, used to lower blood cholesterol); the neuropathic pain/fibromyalgia drug Lyrica (pregabalin); the oral antifungal medication Diflucan (fluconazole), the antibiotic Zithromax (azithromycin), Viagra (sildenafil) for erectile dysfunction, and the anti-inflammatory Celebrex (celecoxib) (also known as Celebra in some countries outside the USA and Canada, mainly in South America).Pfizer's shares were made a component of the Dow Jones Industrial Average on April 8, 2004. Pfizer pleaded guilty in 2009 to the largest health care fraud in U.S. history and received the largest criminal penalty ever levied for illegal marketing of four of its drugs: Bextra, Geodon(Qui Tam lawsuit by Stefan P. Kruszewski), Zyvox, and Lyrica. Called arepeat offender, this was Pfizer's fourth such settlement with the U.S. Department of Justice in the previous ten years. On January 26, 2009, Pfizer agreed to buy pharmaceutical giant Wyeth for US$68 billion, a deal financed with cash, shares and loans. The deal was completed on October 15, 2009.

Current Ratio: Current Ratio is the ratio of current assets to current liabilities. The current ratio indicates the ability of a company to pay its current liabilities from current assets and shows the strength of

the company’s working capital position. Current ratio of 2:1 is considered to be a healthy condition for most businesses according to benchmark. The current ratio was 2.13 in 2011 and 2.06 in 2012. In both the years their performance was good, however in respect to trend, they have a declining trend from 2011 to 2012.Comparing to industry average 1.96 in 2011 and 1.97 in 2012, the company is doing better result and well above the industry average.

Quick Ratio: The Acid-test or quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. Inventories typically are the least liquid of a firm’s current assets; they are the assets on which require more time to be sold and losses are most likely to occur in the event of liquidation. Therefore, it is important to measure the firm’s ability to pay off short term obligations without having to rely on the sale of inventories. Quick ratio of 1:1 is considered to be a healthy condition for most businesses. The current ratio was 1.84 in 2011 and 1.78 in 2012.

In both the years their performance was good however in respect to trend, they have a declining trend from 2011 to 2012.Comparing to industry average 1.62 in 2011 and 1.65 in 2012, the company is doing better result and well above the industry average. From both of the current and quick ratio, it is implied that, they have a very good liquidity condition, which indicates a very good working capital position.

Net Working Capital: Net Working Capital is a measurement of the operating liquidity available for a company to use in developing and growing its business. If a company's current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. A declining working capital ratio over a longer time period could also be a red flag that warrants further analysis. Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable and inventory).The net working capital was USD 32,377 million in 2011 and decreased to USD 29,659 million in 2012. So the overall position of net working capital over the year is decreased.

However, they have a very good standing on having net working capital. Comparing to industry average USD 19,639 million in 2011 and USD 21,066 million in 2012, the company is doing better result and well above the industry average.

Cash Flow to Total Debt: This ratio compares a company's operating cash flow to its total debt, which, for purposes of this ratio, is defined as the sum of short-term borrowings, the current portion of long-term debt and long-term debt. This ratio provides an indication of a company's ability to cover total debt with its yearly cash flow from operations. In calculation of cash flow to total debt, the higher the percentage of the ratio, the better the company's ability to carry its total debt. The cash flow to total debt was increased from 27% in 2011 to 33% in 2012. Due to the increase in net income in 2011 compared to 2012, the cash flow was increased in 2012. As a result, the cash flow to total debt was increased. Comparing to industry average 36% in 2011 and 33% in 2012, the company is doing a lower performance in 2011 and in 2012, it went in line with the industry average.

Net Liquid Balance: This ratio shows the ability of non-spontaneous current assets to cover the non-spontaneous debts. Larger amount is better. The net liquid balance was USD 22,409 million in 2011 and

increased to USD 22,740 million in 2012. The net liquid balance is improved because of an increase in cash in 2011 compared to the cash standing in 2011.Comparing to industry average USD 12,288 million in 2011and USD 14,614 million in 2012, the company is doing better result and well above the industry average.

Cash Flow From operations: The amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities. This ratio was decreased from 0.71 in 2011 to 0.41 in 2012. They have an increasing trend from 2011 to 2012, in both the years and their operating cash flow ratio was in a good standing. The company could cover its interest payment without any difficulty.

Net Profit Margin: This ratio indicates the profit of the firm relative to sales. It is a measure of the efficiency of the firm’s operations as well as an indication of how products or services are priced. This is a measure of the firm’s profitability of sales after taking account of all expense and taxes. It tells the firm’s net income per AED of sales. As, it is discusses in cash flow to debt section, that, Pfizer had a higher net income in 2012 then 2011, their profit margin was also increased as obvious. It was 12% in 2011 and increased to 15% in 2012.Comparing to industry average 13.7% in 2011 and 12% in 2012, the company is doing lower performance in 2011 but well above the industry average in 2012.

Return on Asset: It measures the overall effectiveness in generating profits with available assets; earning power of invested capital. It gives an idea as to how efficient management is at using its assets to generate earnings. The ROA was slightly increased from 4% in 2011 to 5% in 2012. The overall effectiveness on generating profit from their available assets had an increasing trend on the period of 2011 to 2012.Comparing to industry average 6.7% in 2011 and 5.6% in 2012; the company is doing lower results in both the year.

Return on Equity: The ratio compares net profit with the equity that shareholders have invested in the company.

This ratio tells the earning power on shareholders’ book value investment. It determines the rate of return on the invested capital. It measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested. It is used to compare investment in the company against other investment opportunities, such as stocks, real estate, savings, etc. A high return on equity often reflects the firm’s acceptance of strong investment opportunities and effective expense management. The ROE was increased from 9% in 2011 to 12% in 2012. Due to the higher net income in 2012, the ROE was also improved by having a increasing trend from 2011 to 2012.Comparing to industry average 13.1% in 2011 and 11.7% in 2012, the company is doing a lower performance in 2011 and in 2012, it went in line with the industry average.

Merck & Co. Inc. is one of the largest pharmaceutical companies in the world. Merck headquarters is located in Whitehouse Station, New Jersey. The company was established in 1891 as the United States subsidiary of the German company now known as Merck KGaA. Merck & Co. was confiscated by the US government during World War I and subsequently established as an independent American company. It is currently one of the World's seven largest pharmaceutical companies by market capitalization and revenue. The company describes itself as "a global research-driven pharmaceutical company" that "discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health, directly and through its joint ventures”. Merck also publishes The Merck Manuals, a series of medical reference books for physicians, nurses, and technicians. These include the Merck Manual of Diagnosis and Therapy, the world's best-selling medical textbook, and the Merck Index, a compendium of chemical compounds.

Current Ratio: A liquidity ratio calculated as current assets divided by current liabilities. Merck & Co. Inc.'s current ratio fell from year 2011 to 2012 .In 2011 it was 1.69 and then in 2012 it fell to 1.47.That is Merck Company performed better in 2011.Comparing to the industry average we can see that Merck & Co. Inc has better current ratio than the industry average.

Quick Ratio: The Acid-test or quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. Inventories typically are the least liquid of a firm’s current assets; they are the assets on which require more time to be sold and losses are most likely to occur in the event of liquidation. In 2010 the ratio was 1.19 which then fell in 2011 to 1.079.It seems in 2011 Merck Co. was able to meet its short term obligations more efficiently than in 2012, which is a alarming sign as the performance did not improve. On comparing with the industry average we can see that the quick ratio for 2011 was 1.62 and for 2012 it was 1.65.It shows that the industry improved regarding meeting up its short term obligations .Merck Co.Inc’s quick ratio was low for both year compare to the industry average this shows the company have to work hard to improve its position.

Net Working Capital: Net Working Capital is a measurement of the operating liquidity available for a company to use in developing and growing its business. If a company's current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. In 2011, the value was $ 2304.6 million which then fell to $2035 million in 2012.Compare to the industry average we can say that Merck has more Net working capital than the industry average. In 2012, the value was $21066.33 million and in 2011, it was 19638.38.

Cash Flow to Total Debt: The Cash Flow to Total Debt ratio measures the length of time it will take the company to pay its total debt using only its cash flow. This assumes all the cash flow would be used to pay off both Short Term Debt and Long Term Debt, which is not realistically possible for a company to devote all of its cash flow in this way. The ratio increased from 0.176 to 0.212 between 2011 &

2012.Compare to the industry average we can say that industry is in better position than Merck Co. Inc. Net Liquid Balance: The more a firm's net liquid balance, the greater the amount of liquid resources the firm has to finance its working capital requirements. If the increase in working capital requirements is seasonal, it is then appropriate to draw down the net liquid balance. However, if the increase in working capital requirements is permanent due to a higher level of operations, then the increase in working capital requirements should be financed with a permanent source of funds, thereby not depleting the firm's level of liquidity. The ratio increased in 2012 to $3833.7 million from $2728.7 million. Comparing to the industry average we can see that, the ratio increased in 2012 to $12287 million. Therefore, we can conclude both Merck Co. Inc. and the industry performed well in 2011 than 2012.

Cash flow from operations: The amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities. The ratio decreased in 2012 compare to 2011 from 0.531 to 0.292.Therefore the company performed well in 2011.Compare to the industry average, industry average was 0.64 in 2011 whereas Merck’s ratio was 0.531.So industry was in a better position although the ratio fell to 0.47.

Net Profit Margin: Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. the ratio for 2011 & 2012 was low, in 2011 it was 7.1% and in 2012 it was 6.3%.The company performed better in 2011.Comparing with the industry average we can say that the industry’s performance is much better having higher profit margin compare to Merck C. Inc.In 2011 it was 13.7% and in 2012 it was 12%.

Return on Assets: It measures the overall effectiveness in generating profits with available assets; earning power of invested capital. It gives an idea as to how efficient management is at using its assets to generate earnings. In 2011, it was 2.9% but it decreased to 2.8% in 2012, this again shows that the company performed well in 2011.According to the industry average Merck Co. Inc’s ratio was lower as industry average for 2011 was 5.6% and for 2012 it was 6.7%.

Return on Equity: The ratio compares net profit with the equity that shareholders have invested in the company.

This ratio tells the earning power on shareholders’ book value investment. It determines the rate of return on the invested capital. It measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested. In 2011, the ratio was 6.2%, which then fell in 2012 to 5.99%.Comparing to the industry average we can see that industry is again doing better than Merck Co. Inc. in both years. In 2011, it was 13.1%, which then fell in 2012 to 11.7%

TELECOMMUNICATION INDUSTRY

Verizon Communications Inc. is a global broadband and telecommunications company and a component of the Dow Jones Industrial Average. It started in 1983 as Bell Atlantic (based in Philadelphia) with a footprint covering New Jersey to Virginia and emerged as part of the 1984 AT&T breakup into seven "Baby Bells." In 1997, Bell Atlantic merged with another Regional Bell Operating Company, NYNEX, based in New York City with a footprint spanning from New York to Maine. The combined company kept the Bell Atlantic name. In 2000, Bell Atlantic acquired former independent phone company GTE, and adopted the name "Verizon", a portmanteau of verities and horizon. The company's headquarters are located in the Verizon Building at 140 West Street in Lower Manhattan, New York City.

AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the second largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband subscription television services. As of 2010, AT&T is the 7th largest company in the United States by total revenue, as well as the 4th largest non-oil company in the US (behind Wal-Mart, General Electric, and Bank of America). It is the 3rd largest company in Texas by total revenue (behind ExxonMobil and ConocoPhillips) and the largest non-oil company in Texas. It is also the largest company headquartered in Dallas. In 2011, Forbes listed AT&T as the 14th largest company in the world by market value and the 9th largest non-oil company in the world by market value. It is the 20th largest mobile telecom operator in the world with over 100.7 million mobile customers.

Current Ratio Current Ratio 2012 Verizon

1.005786

AT&T

0.748

Time Series Analysis:

Verizon Current ratio is 0.7303 which mean its current assets are 0.7303 times more than its current liabilities. The average current ratio is. 1.005786. So, even though Verizon current ratio is in a better situation.

AT&T’s current ratio is 0.598 which is way higher than industry average0.7303. Therefore, they need to put effort to increase their assets or decrease some liabilities.

I can say that the current ratio of Johnson & Johnson is decreasing early. It was 0.7303 on 2011 but then became 1.005786 on 2012.This indicating their cash in hand is decreasing and they are in a moderate position to handle immediate current asset and liabilities.

Cross-Sectional Analysis: By comparing both the companies, we can say that Verizon has a better position in current asset and current liabilities about its interest expense in comparison to AT&T. In all the two years Verizon has a current ratio higher than 0 thus we can say that they have a lower risk but AT&T current ratio ratio has been consistently less than 1.0 thus I can presume that they have a higher interest rate risk than the Verizon.

Quick Ratio Quick ratio Verizon AT&T

2012 0.94522 0.7487

Time Series Analysis: Verizon’s Quick ratio or Acid Test ratio is 0.6934 in 2011, which is higher than the industry average0.94522. So the company is in a good position. Either they have to clear some of their inventories or increase some of their prepaid expense to still the ratio. AT&T’s quick ratio is 0.598 in 2011, which is lower than industry average. So need to improve their ratio in order to be competitive enough. In 2011, quick ratio for Verizon was 0.598 . T h e r a t i o i n c r e a s e d o n 2 0 1 2 a t 0 . 7 4 8 by analyzing this I can say that this bank on quick ratio position have become worse in 2012.

Cross-Sectional Analysis: When we compare both the banks then we find that AT&T’s quick ratio was lower than Verizon from 2010 to 2011.So, we can say that AT&T was actually worse than Verizon in managing their current asset ,inventory and current liabilities was better able to grow its current ratio.

Net Working capital NET WORKING CAPITAL 2012 Verizon

178

AT&T

-7767

Time Series Analysis: Net working capital for 2008 is 14.02% means Verizon is making Tk. -8249 in 2011 net working capital and 178 in 2012 and we see that it increased in 2012. AT&T’s net working capital is only -14000 which is way higher than the industry average-7767. Not satisfactory for the company.

Cross-Sectional Analysis: In net working capital by comparing both the companies, we can say that VERIZON has a better position in current asset and current liabilities in comparison to AT&T. In all the two years, VERIZON has a current ratio higher than AT&T. We can say that they have a lower current ratio at AT&T. It is risky.

CASH FLOW TO DEBT Cash flow to total debt 2012 40.10% 37%

Verizon AT&T

Time Series Analysis: The cash flow to total debt ratio of VERIZON’S 44.20% in 2011 and 40.10% in 2012 which denotes that 44.20% of company’s cash flow to total debts. It is slightly higher than industry average. However, it does not conclude anything good or bad about the company as it solely depends on the policy of the company. AT&T’s total cash flow is54.3% in 2011 and 37% in 2012 is financed by its debt. The debt ratio is lower than industry average for AT&T’s.

Cross-Sectional Analysis: Comparing both the banks then we find that AT&T’s quick ratio was higher than VERIZON at 2010.In 2011 it was lower than the AT&T. Therefore, we can say that AT&T was actually better than VERIZON in 2010managing their net income, depreciation exp., short-term debt and longterm debt.

Net Liquid balance Net liquid balance 2012 Verizon

9105

AT&T

-268

Time Series Analysis:

In 2011 liquid balance ratio for was Verizon329 and in2012 is 9105. T h e r a t i o d e c r e a s e d o n 2 0 1 1 b u t t h e n i n c r e a s e d mo r e c o mp a r e t o t h e n e x t ye a r o n 2 0 1 2 . I n 2 0 1 1 it was higher. By analyzing this, I can say that this industry average liquid assets and its liquidity position have become worse in 2012.In 2011 liquid balance ratio for AT&T was -5759 and in2011 is -268. T h e r a t i o d e c r e a s e d o n 2 0 1 1 b u t t h e n i n c r e a s e d m o r e c o m p a r e t o t h e n e x t ye a r o n 2 0 1 2 . I n 2 0 1 0 it was higher.

By analyzing this, I can say that this industry average liquid assets and its liquidity position have become worse in 2012.

Cross-Sectional Analysis: In comparing the two banks, it was found that though VERIZON’s net liquid balance was higher two years than AT&T. Thus, it can be said that as VERIZON’s return on equity is higher compare to AT&T’s net liquid balance, thus relative return for AT&T’s shareholders was higher than VERIZON’s shareholders.

CASH FLOW FROM OPERATION CASH FLOW FROM OPERATION 2012 Verizon

0.968

AT&T

0.989

Time Series Analysis: The CASH FLOW FROM OPERATION ratio indicates that operating income of VERIZON is 1.0904 in 2011 MORE than its interest expense is 0.968 at 2012. This is above the industry average. That means some of the industry peers are in a bad position. Pfizer‘s CASH FLOW FROM OPERATIO ratio is 0.4250 times in 2011 where the industry average is 0.989 in 2012.

Therefore, clearly Pfizer is in a better position.

Cross-sectional Analysis: The CASH FLOW FROM OPERATION ratio indicates that operating income of VERIZON is 1.0904 in 2011 MORE than its interest expense is 0.968 at 2012. This is above the industry average. That means some of the industry peers are in a bad position. AT&T‘s CASH FLOW FROM OPERATIO ratio is0.4250 times in 2011 where the industry average is 0.989 in 2012.

Therefore, clearly Pfizer is in a better position rather than VERIZON. Net profit margin Net profit margin 2012

Verizon

9.19%

AT&T

3.30%

Time Series Analysis: Net profit margin for 2011 is 9.58% and 2012 it is decreased at 9.19%. Verizon means is making Tk. 9 net profit for every Tk. 100 worth of sales. This is somewhat higher than the industry average 9.19%AT&T’s net profit margin is only 16.23% at 2011 which is way same as the industry average 3.30%. They are making only Tk.16 net profit after Tk.100 worth of sales. Not satisfactory for the company.

Cross-sectional Analysis: On comparing both the banks it can be said that this ratio for VERIZON has increased and it was greater compare to AT&T. Thus, it can be concluded that VERIZON earns a more stable net profit margin in comparison to the AT&T at 2011 and 2012.

Return on Assets Return on asset 2012 Verizon

4.42%

AT&T

1.54%

Time Series Analysis: Net profit margin for 2011 is 4.64% and 2012 it is increased at 4.42%. VERIZON means is making Tk. 4 net profit for every Tk. 100 worth of sales. This is somewhat higher than the industry average 4.42% this is higher than the industry average. Therefore, competitive enough for its industry peers in VERIZON. AT&T’s net profit margin is only 7.49% at 2011, which is much lower than the industry average 4.42%. They are making only Tk.7.42 net profit after Tk.100 worth of sales. More satisfied for the company.

Cross-sectional Analysis: On comparing both the banks it can be said that this ratio for AT&T has increased and it was greater compare to VERIZON. Thus, it can be concluded that AT&T earns a more stable net income in comparison to the VERIZON at 2011.

Return on Equity Return on equity 2012 VERIZON

11.87%

AT&T

3.95%

Time Series Analysis:

In the year, 2011 return on equity at VERIZON was 11.75% and 11.87% at 2012.This represents that for every Tk. 100 worth of investments, shareholders earned Tk. 11.75. This is higher than industry average. In order to improve VERIZON ROE, either they need to increase their net profit or decrease their equity portion.AT&T’s return on equity is 18.02% at 2010, which is higher than the industry average 3.95% at 2012. That means for every Tk.100 worth of investment, shareholders earn Tk.18.02 while the average industry peers earn Tk.3.95.

Cross-Sectional Analysis: In comparing the two banks, it was found that though AT&T’s return on equity was higher two years than VERIZON. Thus, it can be said that as AT&T’s return on equity is higher compare to VERIZON’s return to equity, thus relative return for AT&T’s shareholders was higher than VERIZON’s shareholders.

Time Warner Cable Inc. (TWC) (NYSE: TWC) (formerly Warner Cable Communications) is an American cable telecommunications company that operates in 28 states and has 31 operating divisions. Its corporate headquarters are located in the Time Warner Center in Midtown Manhattan, New York City, with other corporate offices in Cambridge, Massachusetts Columbus, Ohio; Buffalo, New York; Charlotte, North Carolina; and Virginia. Originally controlled by Time Warner, that company spun out the cable operations in March 2009 as part of a larger restructuring. Since then, Time Warner Cable has been an entirely independent company, merely continuing to use the Time Warner and Road Runner brands under license.

Time Warner Cable does own several local news and sports channels, but it no longer has any corporate affiliation with national cable channels such as CNN or HBO, which remain the property of the original Time Warner.

Current ratio Ratio

Actual 2012

Current 1.191 ratio times

Industry average 2012 0.983

Interpretation: In the year 2012, the Time Warner Cable Company’s current asset was 1.191 times more than its current liabilities. From the time series, analysis a decreasing of the current ratio can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the current ratio of the company is good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 both the current asset and current liability was increased, but the current asset increased more than the current liabilities.

That is why the ratio decreased.

Net working capital:

Ratio

Actual 2012

Net $1028 working capital

Industry average 2012 $-2187

Interpretation: In the year 2012, the Time Warner Cable Company’s net working capital was $1028. That means they had $1028 for their day-to-day operations. From the time series, analysis a decreasing of the net working capital can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the net working capital of the company is good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 both the current asset and current liability was increased, but the current asset increased more than the current liabilities. That is why the ratio decreased.

Quick ratio Ratio

Actual 2012

Quick ratio

1.191 times

Industry average 2012 0.971times

Interpretation: In the year 2012, the Time Warner Cable Company’s Quick ratio was 1.191 times more where they had no inventory. From the time series, analysis a decreasing of the Quick ratio can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the Quick ratio of the company is good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 both the current asset and current liability was increased, but the current asset increased more than the current liabilities.

That is why the ratio decreased. In addition, they had nothing to their inventory.

Cash flow to total debt Ratio

Actual 2012

Current ratio

0.1599

Industry average 2012 0.3103

Interpretation: In the year 2011, the Time Warner Cable Company’s cash flow to total debt was 0.1599.From the time series analysis, it can be seen from 2011 to 2012 the cash flow to total debt was not changed. In addition, from the cross sectional analysis it is observed that the ratio is also below

the industry average. Therefore, this ratio of the company is not very good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 both the current liability was increased.

Cash flow from operations

Ratio

Actua l 2012

Cash flow 1.059 from operation s

Industry average 2012 1.005

Interpretation: In the year 2012, the Time Warner Cable Company’s cash flow from operation was 1.059 times more than its current liabilities. From the time series, analysis a decreasing of the cash flow from operation can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the ratio of the company is good. The reason behind this decreasing in the ratio is, from the year 2011 to 2012 both the cash flow from operation and current liability was increased Return on equity Ratio Actual 2012 Industry average 2012 Return on 0.221 0.126 equity Interpretation: In the year 2012, the Time Warner Cable Company’s net income was 0.221 times more than its shareholder’s equity. From the time series, analysis a increasing of the ratio can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the ratio of the company is good. The reason behind this increasing in the ratio is, from the year 2011 to 2012 the net income was increased.

Return on asset Ratio Actual Industry 2012 average 2012 Return 0.0345 0.0314 on asset Interpretation: In the year 2012, the Time Warner Cable Company’s net income was 0.0345 times more than its total asset. From the time series, analysis an increasing ratio can be seen from 2011 to 2012. In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the ratio of the company is good. The reason behind this increasing in the

ratio is, from the year 2011 to 2012 both the net income and total asset was increased that is why the ratio was increased.

Profit Margin: Ratio

Actual 2012

Return on 0.0847 equity

Industry average 2012 0.0699

Interpretation: In the year 2012, the Time Warner Cable Company’s net income was 0.0847 times more than its revenues. From the time series, analysis a increasing of the ratio can be seen from 2011 to 2012.

In addition, from the cross sectional analysis it is observed that the ratio is also above the industry average. Therefore, the ratio of the company is good. The reason behind this increasing in the ratio is, from the year 2011 to 2012 both the net income and revenues was increased.

Comparative Analysis Based on the above financial analysis we have recommended the companies to invest in the following priority basis: Rank Company Sales Net Income 2012(Jan2012(JanAug) Aug) 01 Apple Inc. 41.16 67.11 02 Microsoft Corp.

9.57 12.94 03 Wal-Mart Inc. 6.21 6.12 04 3M Co. 4.72 5.36 05 Boeing Co. 3.70 5.26 06 GAP Inc. -1.75 1.26 07 DELL Inc. 1.97 -6.06 08 American Eagles 5.03 -9.14 09 Citigroup Inc. 0.93 -11.82 10 HSBC PLC -0.59 -3.28 11 PEPSICO 71.59 -0.87 12 VERIZON 44.295 -0.915 13 AT&T 37.4483 -0.1911 14 GENERAL MILLS 85.75 32.40 15 JNJ 68.45 -0.93 16 PFE 23.92 -0.02 17 MRK 43.91 0.37 18 TWC 87.94 2.34 The Best Company (which one is the best)

chronological order of the Dividends 2012(Jan-Aug) NA 12.83 15.06 4.56 9.86 17.32 NA 19.03 NA -13.20 2.03 1.96 NA NA NA NA NA NA

After analyzing all companies I think that Time Warner Cable is one of the best company of NYSE .In 2012 from January to August here net sell is 87.94 and net income is 2.34.so it is one of the best company of NYSE. Conclusion To determine a company’s profitability and financial positions we need to Value the price of a share of stock. The market efficiency states that all available information about a company is quickly represented in its price per share of stock. The market value ratios discussed here reflects a company’s worth by assuming the market price per share is an accurate measure of future profitability and company’s financial position. The qualitative and quantitative measures analyzed in this report could give rational information and assumptions regarding the company’s growth and investor’s profit. These measures help the investors to make investment decisions considering their future financial position. The rumor also effects the movement of the share price that is non-diversifiable. It could give benefit or it could incur loss. Therefore, there is nothing that an investor can do. It is beyond the investors control as well as the whole market participants.

This report contains the qualitative and quantitative measures that investors should look at while investing in stocks and as a long term basis and short term basis which companies will be perfect for investment in DSE. As a result, it is very effective and essential as investors to point out those factors, which can give us a better outcome while investing in share market, which could mitigate the volatility, and impulsive factors.