ABC Investing Class – 2 Analyzing Company Shobha Narasimha
Rising Money Any company can rise money in two ways Debt (loan ) Equity
Debt – Corporate Bond Debt Corporate Bond AAA – low risk, low rate of return AA+,AA,AA-,--- BBB, BB, CCC+, CCC– Risk and Rate of Return increases AAA – is called high grade bond BB, ---- CC, are called Junk Bonds or high yield
Equity Primary Shares when company issue first time shares/stocks Primary Shares Money Goes to Company Secondary Shares that are trade in the market Company is not involved in secondary Shares trade
Secondary Market Buyer Seller
Market Capitalization Outstanding shares * Stock Price Market Capitalization Market Capitalization Fluctuates daily along with stock price
Simple Balance Sheet
Debt to Asset Ratio Total Debt/Total Asset This ration too much is not good Why? Interest Expense
Find Out Find Out what is Apple Market capitalization Find out Debt /Total asset ratio for Starbucks Pick a random company and find out what it is doing
Evaluate Company What is a particular company doing What is its debt / Total asset ratio Pick company debt/asset ratio < 20%