XACC 280 WK 7 - DQ 2
Discussion Question 2
I will start my discussion with the point that I will not make an investment (stock purchases) in the quality department store without taking into account the other type of data. The most important to consider is the fundamentals of the macroeconomics that will lead to a decrease in the spending by the consumer. There always has to be an alternative investment point that will give me the greater and better return on my investment. From the above discussion and I am asked that I will make an investment on the basis of the data in the various ratios. I will assume that are no problems with any type of the economic factors and that there is no alternative investment. In this scenario I will make an investment in the company for a number of reasons.
First point is that they have good average profit and consistent and stable profit margins that appear to rise in the last two years. The most important to me is that the return on the assets ratio is quite impressive and appealing as compared to other related companies. This ratio shows that the management has the skills of running and operating the business efficiently and effectively with the low operating costs. The management is also in a position to have a high return on the assets in spite of the fact that their asset turnover ratio is low. According to me this is a point that has to be improved. This point and area need a capable and effective management and it will enhance the revenue. The return on the shareholder equity is also a strong point that will convince me that this company is a good place for the investment. In the last is the P/E ratio. This ratio is low as compared to the other kind of companies in the industry. This leaves me with the idea that th