Investment Analysis.

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Presentation transcript:

Investment Analysis

3 Factors to Consider… Rate of return: dividing return by investment. The higher the return, the more desirable the investment Pay-Back Period: # of years required for estimate net income to return the investment. Divide investment by annual return. Discounted Future Earnings: higher the discount rate, the less value a dollar has in the future.

4 Key Types of Investment Ratios Asset productivity rations: ratios describe how effectively an asset is deployed or utilized. Financial Strength ratios: Measured to what extent a company resources are provided by sources other than the owners.

4 Key Types of Investment Ratios Profitability ratios: Also referred to as management effectiveness because they indicate management’s overall success in generating returns for the enterprise. Valuation ratios: relate the company’s stock price to its performance.