ABC Investing Class – 2 Analyzing Company Shobha Narasimha.

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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%

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