David and Lucile Packard Foundation
Investment Philosophy and Strategy
1) What investment philosophy and strategy would you choose in order to best further the goals of the David and Lucile Packard Foundation?
2) To what extent can your investment philosophy and strategy at the David and Lucile Packard Foundation differ from that of a manager of a for-profit fund or from that of an individual investor? Please explain your reasoning.
Include answers to the following:
a) Define an investment philosophy and strategy.
b) Analyze investment philosophies and strategies in terms of risk, time horizons, and market timing.
c) Compare and contrast investment philosophies of foundations, individuals, and for-profit funds.
The goal of David and Lucile Packard Foundation is to earn above the benchmark investment returns rate and also ensure growth in the portfolio in order to give significant funds to current and future grantees. The foundation is ready to take risk appropriate not only to preserve but to increase the spending power of the endowment. Pursuing this goal the David and Lucile Packard Foundation decided to move away from its two-stock portfolio. It had investments in HP and Agilent but since has decreased its holding to less than seven percent. The investment objective of the Foundation is to diversify and also to make program related investments.
Since the objective of David and Lucile Packard Foundation is to earn above benchmark investment growth and returns, the suitable philosophy for the foundation is the value investing. This means that the foundation should seek relatively undervalued stocks and hope that they will produce high returns in future. This philosophy should be mixed with investing in companies that have strong fundamentals. The David and Lucile Packard Foundation should invest in shares of companies which have a strong earning potential. Further, the foundation should have the philosophy of carrying out socially responsible investing. That is, it should invest in companies that adhere to a certain set of moral or ethical business standards.
The investment strategy that the foundation should have should be "buy and hold." David and Lucile Packard Foundation should use this strategy because it is a long term investment strategy. This strategy has been recommended because long term equity markets give a good rate of return. Also since the foundation is a large investor it should focus on market timing. It should buy stocks on the lows and sell on the highs. The foundation can predict future market price movements through forecasting of economic conditions or analyzing the market conditions. The foundation can carry out technical and fundamental analysis.
To a great extent the philosophy and the strategy of an individual investor can differ from that of David and Lucile Packard Foundation. The investment philosophy refers to the set of guiding principles that form a company's, individuals', or a foundation's investment decision making. The investment strategy represents the rules, or procedures that guide the ...
This solution explains. David and Lucile Packard Foundation investment management The sources used are also included in the solution.
Liquidity Ratios and Solvency Ratios in accounting
I have to choose two publicly traded companies and compute liquidity ratios and solvency ratios. I have chosen Dell and HP as my companies and the financial information for the FY2008 has been attached for each company. The list below is what I have to derive from the information.
Compute the following liquidity ratios for each of the companies, and comment on the relative liquidity of the two competitors.
i) Current ratio.
ii) Receivables turnover.
iii) Average collection period.
Compute the following solvency ratios for each of the companies, and comment on the relative solvency of the two competitors.
i) Debt to total assets ratio.
ii) Times interest earned.
iii) Cash debt coverage ratio.
iv) Free cash flow.
iv) Inventory turnover.
v) Days in inventory.
vi) Current cash debt coverage.
Compute the following profitability ratios for each of the companies, and comment on the relative profitability of the two competitors.
i) Profit margin.
ii) Asset turnover.
iii) Return on assets.
iv) Return on common stockholders' equity.
e) Which of the two companies would you prefer to invest in? Why, and under what circumstances?
I understand that to get the current ratio you have to divide current assets by liabilities. I have found this information. I also understand many of the ways to get the information, but I am having difficulty finding the information in the financial statements. If you could please help me get the information and give me where you found it in the documents.View Full Posting Details