Investing in stocks is an option when planning for retirement or other financial management decisions. In this activity, you will research how to evaluate stocks as an investment option.
In a 1–2-page paper, please respond to the following:
- Explain the differences in stock trading between two different stock exchanges.
- Identify two different stock exchanges in the United States.
- Describe the similarities and differences between the two stock exchanges.
- Explain how a company’s free cash flow impacts its growth potential. Cite the free cash flow of example companies.
- Identify one company on each of the two stock exchanges you researched in 1.
- Determine the free cash flow from 2019 and 2020 for each company.
- What inferences can you draw from the companies’ free cash flow?
- Apply financial ratios to evaluate the strengths and weaknesses of stocks as investments.
- Using the 2019 and 2020 financial statements for both stocks, prepare two financial ratios for each of the following categories: liquidity ratios, asset management ratios, and profitability ratios. You should have a total of six ratios for each stock, per year.
- What challenges, strengths, or weaknesses do you see when you examine these ratios?