Purchase Solution

Profit and Shareholder Wealth Comparison

Not what you're looking for?

Ask Custom Question

Please see attachment.

Profit and Shareholder Wealth Comparison Paper
General Electric Corporation and Tyco International are both classified as "conglomerates" (having many diversified business lines). General Electric has pursued a conservative growth strategy by focusing on being the number one or number two in each industry where it competes.
Tyco has pursued very aggressive sales and earnings growth strategy through rapid, multiple acquisitions.
1) General Electric www.ge.com
2) Tyco International www.tyco.com
b) From each company's web site, and/or web based financial services sites (e.g.: finance.yahoo.com, moneycentral.msn.com, annualreports.com, sec.gov) locate the following information:
1) Common shareholders' equity (total equity less any preferred stock equity)
2) Market Capitalization (total common stock shares outstanding times latest stock price)
3) Net profit margins for each company for the past 5 years.
c) Prepare a 700-1,050-word paper in which you answer the following:
1) Divide each company's market capitalization by that company's shareholders' equity. This market-to-book ratio provides one measure of shareholder wealth created by each company. Include your calculations in the assignment.
2) Based on these market-to-book ratios, which company's strategy has provided greater shareholder wealth creation?
3) Calculate the average net profit margin for each company for the five years worth of data obtained. Include your calculations in the assignment. Based on these average net profit margins, which company has done a better job of maximizing profits?
4) Did the company achieving the greatest profit maximization also achieve the greatest stockholder wealth maximization? If not, which strategy was more beneficial to the shareholders?
5) Which company's strategy has presented greater risk to the shareholders' investment?
6) Have the investors assuming that greater risk been rewarded with greater investment

Purchase this Solution

Solution Summary

Response provides the steps for Profit and Shareholder Wealth Comparison

Solution Preview

Profit and Shareholder Wealth Comparison Paper
General Electric Corporation and Tyco International are both classified as "conglomerates" (having many diversified business lines). General Electric has pursued a conservative growth strategy by focusing on being the number one or number two in each industry where it competes.
Tyco has pursued very aggressive sales and earnings growth strategy through rapid, multiple acquisitions.
1) General Electric www.ge.com
2) Tyco International www.tyco.com
b) From each company's web site, and/or web based financial services sites (e.g.: finance.yahoo.com, moneycentral.msn.com, annualreports.com, sec.gov) locate the following information:
1) Common shareholders' equity (total equity less any preferred stock equity)
Common shareholder's equity
In $mn 2008 2007
GE: = 104,700.0 115,600.0
Tyco: 15,494.0 15,624.0

http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=ge&lstStatement=Balance&stmtView=Ann

2) Market Capitalization (total common stock shares outstanding times latest stock price)

GE:
Number of Shares outstanding= 10,495.85
Market price per share=$10.86
Market capitalization= $mn 113984.9
http://moneycentral.msn.com/companyreport?Symbol=US%3age

Tyco:
Number of Shares outstanding= 477.67
Market price per share=$23.13
Market capitalization= $mn ...

Purchase this Solution


Free BrainMass Quizzes
Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Operations Management

This quiz tests a student's knowledge about Operations Management