Long-Term Liabilities

19 May No Comments

Use the Internet or Strayer online databases to research companies like Philip Morris International, Medtronic Inc., Plains All American Pipeline LP, and Simon Properties Group that all sold 30-year bonds in 2012 in an effort to extend their debt, lock in low interest rates, and take advantage of investor demand. Then, determine the principal advantages and disadvantage of issuing 30-year bonds over 5-year bonds for the companies you researched. Provide support for your response.

Issuing a bond is dependent upon two standards’, one the fiscal danger (ranking) of the issuing nation and secondly the monetary outlook of the overall world economic climate (US & ecu ordinarily). If the economic system is anticipated to head by means of tough instances, huge investors select bonds due to the fact that it’s a chance free return on investment. On the other hand, if the economic system is predicted to do excellent the bond market just isn’t an excellent funding as you assume more returns from economic markets and different financial instruments when compared to bonds.

Use the Internet or online databases to research one (1) publicly traded company, which analysts have examined and ranked. (Note: You may use http://biz.yahoo.com/ or another Website.) Determine the key factors use to prepare their analysts and buy / sell recommendations. Then, discuss the key factors that generate a strong buy or sell ranking, and explain the primary ways in which an investment rating impacts the price of a company’s stock.

1. Publicly traded company

3M

This is a multinational conglomerate corporation listed company with up to 30 billion pounds in sales ,producing more than 55,000 products and have 88,000 employees.

2. Key factors used by analysts

(a).Business model – involves looking at the financial statement of a company without which one cannot know what the drivers are for future growth (b).competitive advantage- looks at how powerful are the company’s competitive advantage to enjoy the growth and profit and also keep the competitors at bay. (c). Management- how reliable and hardworking is the management. (d). Corporate governance – the analyst looks at the policies within the organization to ensure proper balance and checks are in place.

3. Key factors that generate strong buy and sell ranking

Price to earnings ratio market returns and risk dividend return

Investment ratings do affect the prices of the stock of a company, when a stock to a conviction buy list is added then the stock prices are expected to move up, when the stock to conviction sell list is added the stock prices are expected to downgrade.

4. Criteria for classification

Standardization of data –the analyst looks at the data of the company that is provided both quarterly and annually for periods ranging from 5 to 20 or more years

Restatement of data – the analyst looks at how the restatement is treated, restated financial statement are very important in comparison of the companies

Periodicity of data- dates in the financial statements and how quickly they release their financial results after the financial reporting period.

5. Criteria for rating

Financial condition – analyze the financial statements of the companies

Business activities – what products and services do the company provide

Quality of management- how committed and qualified is the management

Discuss at least three (3) criteria that an analyst may use when classifying a publicly traded company as a strong buy. Indicate the typical criteria that analysts use in rating a company.

The reason ranking is important, is due to the fact that it shows what a company has achieved, its current status and projected future. Things that factor into strong ranking are trust, longevity (good revenues), evolution (growth, new products, staying current with the times/demands) and convenience/accessibility (are locations near the masses? websites easy to use, good customer services). Lower the grade/report card the less likely people will feel comfortable to invest, the higher the report, the more likely of getting investors. An analyst may use the term cap when talking about a company’s capitalization or financial room and company size. There are three levels: small cap, mid cap and large cap. Using these levels to identify companies allows analysts to give recommendation to purchase or sell stock. Credit ratings are also used by analysts to rate a company.




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