Toshiba as One of the Prominent Companies - Case Study Example

Technical Analysis Name Institution Date Introduction Investment options for companies over the years have been on the increase. This can be attributed to the growth and development of financial market. Bonds and shares are the most preferred investment options for most of the companies. Risks and uncertainties are, however, associated with the financial markets (Seng & Hancock, 2012). This exposes the companies to financial loses incase financial option is not successful. Technical analysis is therefore important for the purposes of determining the performance in the financial market. Organizations use technical analysis in order to determine the financial viability of bonds and shares. The information obtained can be used by the organization in decision making process. Toshiba is one of the multinational companies that utilize the financial market to carry out investments. The paper analyses the financial technical analysis concepts in relation to Toshiba. About the company Toshiba is a Japanese multinational that was established in 1938. The company is headquartered in Tokyo Japan and it mainly specializes in the production of electronic goods (Goetsch & Davis, 2014). It has several subsidiaries in different companies and it employees about 200,000 employees based in different countries. In 2015 alone, the revenue of the company was 6.656 Japanese Yen while the net income was 37.87 billion Yens. The company is considered the fifth largest personal computer vendor in the world and the fourth largest manufacturers of semiconductors. The company is listed in the Tokyo Stock Exchange where it generates revenue (Goetsch & Davis, 2014). The company has been performing well financially over the years. However, it was rocked with financial scandals in 2015 which led to the resignation of the Chief Executive Officer. The company had inflated its profits by $ 1.2 billion over a period of seven years. The scandal led to the removal of the company from the Stock Index showcasing it as one of Japan’s best companies. The company utilized bonds and shares to raise revenue. This has contributed to the success of the company has it has been able to obtain funds for expanding its business operations. The products of the company are also credited for its high quality which has led to its good brand image. About ishares and AGG bonds iShares is a family of exchange trades funds (ETFs) which is managed by Blackrock. Each iShare fund usually tracks a bond or stock market index (Gasbarro, et al, 2012). Various stock changes across the world including those traded by Toshiba lists ishare funds. It is also considered as the largest issuer of ETs globally. As a result of the financial scandal that rocked the company, it emerged the bottom of ishares in December 2015. The performance of other companies in different sectors has also been going down as a result of global economic and financial challenges. Aggregate bond (AGG), is considered as part of the ishares core suite. AGG is widely preferred by most of the organizations including Toshiba due to its benefits. AGG exposes the companies to US investment grade bonds. This increases the chances of the company to raise more finances. AGG is also low cost with diversified access to the US investment grade bond market in a single fund (Gasbarro, et al, 2012). This is also beneficial to the companies in terms of raising funds from the bond in USA financial market. AGG is useful in seeking stability and pursuing income for the companies. The US treasury as well as banks such as JP Morgan and Barclay’s banks are actively involved in the ishares. Reviews Technical analysis is required before an organization makes decision regarding investments in the financial market. It is advisable for an organization to consider the fund’s investment objectives, charges, risks and expenses before an investment. Such information can be found in the prospectus of the fund. The major investment risk includes a possible loss of principal by the company (Gasbarro, et al, 2012). When dealing with the iShares it is also important to note that it does not seek to replicate the performance of an index. The funds may have a higher portfolio turn over than the funds seek to replicate. The bond values are dependent on the interest rates. The bond values usually decline when the interest rates rises (Dharemoller, 2013). Credit risk is the possibility of the bond issuer not to make principal and interest payments. Junk bonds usually increase the risk of default subject to market fluctuations. Any investment in a fund is not insured or guaranteed by government agencies. This is a major risk for the companies investing in bonds. The returns or yield from the investments is also influenced by the market conditions (Guo & Leung, 2014). The performance in the market usually differs depending on the sectors. The current market conditions in some of the sectors usually led to better performance (Seng & Hancock, 2012). A good market performance has the potential of benefiting the iShares. The investors must also consider the risk of volatility as it affects the returns. In most cases, index returns are mainly for illustrative purposes only. The index performance returns may not reflect the transaction costs, management fees or expenses (Dharemoller, 2013). The indexes are usually unmanaged and companies can therefore not invest directly on an index. Objective The calculations are mainly for the purposes of technical analysis for Toshiba. The calculations provide useful information about the volatility of the bonds with regards to the company and iShares AGG returns. It also indicates the performance of Toshiba in relation to iShares and AGG returns. Methodology The data used for carrying out the calculations have been collected from Toshiba. The data collected was from the year 2012, 203 and 2014. A detailed and comprehensive financial analysis was carried out on the data before the calculations. The iShares and AGG Returns of the company were also analyzed during the calculations. During the calculations, statistical methods were utilized. This involved the use of the standard deviation which is mainly used when dealing with the historical volatility of the investment option. In technical analysis, higher standard deviation indicates that the investment option is highly volatile (Seng & Hancock, 2012). A lower standard deviation indicates that the investment option is less volatile. Price movement of stock is also an important consideration during the technical analysis. Moving average value method was used for tracking the price movement in the stock market. The moving average is also a statistical method and it sums up all the past closing prices within a given period of time. The performance of the company as well as the behavior of the investments was also determined using the moving average method. The data was then analyzed through a graphical representation. Analysis The analysis mainly involved the comparison of Toshiba return and iShares AGG returns. The standard deviations for both variables were also calculated. The standard deviation for Toshiba return was 0.017775494 while that of iShares AGG returns was 0.00196204. The portfolio standard deviation was 0.00894172. The weight x was found to be 0.00888775 while the weigh Y was found to be 0.00098102. Standard deviation is an important measure of how the data is spread apart (Seng & Hancock, 2012). The more the data is spread apart, the higher the different it is from the norm. This is an indication of high volatility of the stock. The moving average which is an important indicator of technical analysis was also used in the analysis and the results were used to plot the graph of Toshiba returns and iShares AGG returns. The standard deviation was also used during the analysis as it ensures all the performance swing is captured into a single number. The risk related to the bond was the main focus of the analysis. This is considering that the risk has the potential of leading to losses of the principal. The comparison that was made was useful in highlighting the risks that are associated with the bond. Findings The standard deviation for Toshiba returns is higher as compared to the iShares AGG Returns. This is an indication that the risk for investing in the bond is quite low. The standard deviation also indicates that the risk facing the company is low. This is based on the dispersion of the data for the company. It is safe for the company to invest in the iShares based on the information obtained from the calculations. The company is likely to generate more returns as a result of investing in the bond. Investing in the iShares AGG returns will play an essential role in enabling the company to access the US financial market (Gasbarro, et al, 2012). The data also indicates that the risks in the industry are quite low which is beneficial to the company. The standard deviation method has been useful in the analysis of the data and it provided accurate information. The standard deviation method was also successful as the information could be compared between the two variables. Conclusion In conclusion, it is evident that Toshiba is one of the prominent companies in the electronics industry. The company is financially stable although it has faced some challenges regarding accounting scandals. It is evident that the iShares is important in tracking the bonds in the financial market. The financial market is faced with several risks and hence the importance of technical analysis. The technical analysis can be carried out based on the data through the use of statistical methods. The standard deviation as well as the moving averages can be used during the calculations. It is evident from the calculation that the risk of ishares bond is low for the company. The company can benefit from the low risk posed by the ishares AGG returns. The investment in iShares gives the company an access to the USA financial market. The results of the standard deviation also indicate that the company is performing well. References Goetsch, D. L., & Davis, S. B. (2014). Quality Management for Organizational Excellence. New York: Pearson. Gasbarro, D. et al. (2012). Stochastic dominance and behavior towards risk: The market for iShares. Annals of Financial Economics, 7(01), 1250005. Dharemoller, C. (2013). Unshrouding for competitive advantage. Journal of Economics & Management strategy, 22(3), 551-568. Guo, K., & Leung, T. (2014). Understanding the tracking errors of commodity leveraged ETFs. SSRN 2389411. Seng, D., & Hancock, J. (2012). Fundamental Analysis and the Prediction of Earnings. IJBM International Journal of Business and Management. Read More