Case Study

Additional Case Study Components

In order to continue our research of the two companies you are analyzing for Janella, we are going to take a look at a few additional components that your team may consider before making a fnancial recommendation.

1. Assets

Any resources that provide a current, future or potential economic beneft for an individual or other entity. An asset is something that is owned by you or something that is owed to you or a company.

What are personal assets that you may have?

What are the types of assets that a business may have?

Total assets provide a snapshot of the overall fnancial health of the business.

A company’s total assets are recorded on their balance sheet.

2. Liabilities

Something a person or company owes, usually a sum of money.

What are personal liabilities that you may have?

All companies must take on liabilities in order to operate and grow. Whenever a company purchases something, they will either pay with cash or they borrow money.

Borrowing creates a liability and a claim on their total assets by creditors and it must be repaid at some point through cash or the loss of other resources.

Similar to assets, a company’s total liabilities are recorded on their balance sheet.

What types of liabilities would a business have?

3. Market Share

The percentage of an industry that is earned by a particular company over a specifed time period.

This metric is used to give a general idea of the size of a company in relation to its market and its competitors.

Take a look at the graphic below. What do you notice about Apple’s market share within the smartphone industry?

4. Market Capitalization (Market Cap)

The value of a company that is traded on the stock market.

Market cap is calculated by taking the price of a share of stock times the number of outstanding shares.

Market cap is a common way to assess the size of a company.

In general, companies with a larger market cap are considered safer investments because they are likely more established businesses and have been around longer.

Example: A company with 1 million shares outstanding priced at $1 each would have a market cap of $1 million.