Essays on Apple and Google Finances Assignment

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The paper "Apple and Google Finances" is a great example of a finance and accounting assignment.   An investor uses financial parameters to determine the financial risk of a publicly-traded stock. This discussion examines financial risk using price earning ratio (P/E) and beta parameter. The ratio P/E is a number that informs how much an investor would pay to get 1 $ profit. For example, if a share price is $ 18 and earning is $ 3, then an investor pays $ 3 to make $1. An investment carries two concepts; return and risk.

The concept of “ return” in financing is how much an investor is going to get within a certain period of time on an invested amount of money. This return is associated with risk. One of the models is the Capital Asset Pricing Model (CAPM) that considers the risk concept associated with the investment. The formula for return according to the CAPM method is; ROR = Rf + β (Rm – Rf). In this formula, β is a risk measurement indicator. Return is higher for a higher value of β .Liquidity indicates how quickly an asset can be turned into cash.

It is measured using the formula, Current ratio = current asset / current liabilities. The higher value of the current ratio demonstrates the liquidity of the company. Asset management is measured using the ratio return on assets, ROA. It is expressed as, ROA = Net income / Total Assets. This ratio demonstrates how total assets are used to make a profit. A company can use its own funds, borrow the capital, or combine its own funds and borrowed money to purchase property or equipment.

Financial leverage illustrates the company’ s activities in acquiring an asset. The ratio that is widely used to specify a company’ s financial leverage is the debt-to-equity ratio. The industry-accepted method to express the profitability of a company is the return on equity (ROE). It is expressed as, ROE = Profit after taxes / Shareholder funds. The market value indicates the price at which an investor at a given period of time buys or sells a common stock. We are comparing two companies: Apple, Inc. , and Google (“ Apple current ratio” , “ Google current ratio” ).

Works cited

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