Case Study

Company Comparison Case Study What is a case study?

A case study is an in-depth analysis of an entity or multiple entities (for our purposes, stocks or companies) in order to understand all of the diferent factors involved in that entity.

What are some of the components analyzed within a case study?

It is important to properly analyze and research the background of the focus of your case study. For RTSWS, we will be conducting a case study on two companies within the same industry.

1. Company Background

• What industry is the company in? • What is the company known for? • Does the company have a positive or negative reputation? • What can you learn about the company’s management or leadership?

2. Revenue = Money coming in

How do companies generate revenue?

Let’s take the company Apple for example. What are Apple’s primary revenue sources?

How does the company make money?

3. Expenses = Money going out, costs

What are diferent expenses that companies have?

Thinking again about Apple as an example, what are expenses that Apple has within its operations?

How do these expenses afect the business?

4. Proft = A fnancial gain equal to the diference between the amount earned and the amount spent

Revenue vs. Proft

Revenue is the total amount of income generated by the sale of goods or services related to the company's primary operations.

Proft, which is typically called net proft or the bottom line, is the amount of income that remains after accounting for all expenses, debts, additional income streams and operating costs.

Net Proft = Revenue - Costs

5. Earnings Per Share (EPS)

A company’s net proft divided by its number of shares of stock.

EPS is a good refection of how well the company performed.

• If the company made a lot of money that year, it would have a higher EPS.

• However, if the company performed poorly, they are more likely to have a negative EPS.

6. Price to Earnings (P/E) Ratio

A ratio for valuing a company that measures its current share price relative to its earnings per share (EPS).

• A high P/E ratio could mean that a company’s stock is overvalued or that investors are expecting high growth rates in the future.

• A low P/E ratio is generally better and can mean that a stock is “cheap” relative to its profts.

• P/E ratios don’t tell us much on their own. They should be used to compare against similar companies in the same industry or compared with the same company across a period of time.