Module 6-1 Discussion:
Choose one of the following two prompts to respond to. In your two follow up posts, respond at least once to each prompt option.
You are invited by a local investment services firm, Edge Equity Investments, to interview for the position of investment manager in their local office. The position requires you to identify and promote investment opportunities offering superior returns to clients. Returns are a combination of dividends and increases in share value over time. This position will expand your skills in financial analysis and move your career forward in an exciting direction, and the firm is offering you an attractive benefits package in addition to a comfortable salary.
Prior to the interview, you must produce a report determining whether to recommend investment in Southwest Airlines listed on the New York Stock Exchange. Given the research you prepared as you invested funds received from a recent inheritance, you have decided to research this same firm.
Instructions:
Your task is to produce an Investment Analysis Report (with a maximum of 2,200 words, tables/graphs not included) appraising the return on equity of the firm you selected for review over the past two years using the latest 10-Q and the corresponding 10-Q from the previous year (so if you are using the 3rd quarter 10-Q, the comparison should be the 3rd quarter 10-Q from the previous year). You are required to employ financial statement analysis to break down the return on equity into its key parts using the basic Du Pont formula (See the reference section 3.6 of Chapter Three: Analyzing Financial Statements and point values below). Please consider that the panelists are all busy professionals not interested in reviewing a long report; therefore, you will need to keep to the word limit. The panel has also asked that you focus on analyzing the issues rather than on purely describing information. Analysis requires you to focus on explaining and predicting implications of trends rather than merely describing trends. Plan to include the following two sections in your analysis:
Section A: Investment Analysis
Company Overview & Firm-Specific Risks (max 200 words) [10 points]
Profit Margin (max 500 words) [20 points]
Total Asset Turnover (max 500 words) [20 points]
Equity Multiplier (max 500 words) [20 points]
Based on the above criteria, your investment recommendation to clients of Edge Equity Investments (max 200 words) [20 points]
Section B: Limitations
The task requires you to determine whether or not to recommend investment in this firm based on the preceding four categories of information. In the concluding section, you are to elaborate on the limitations of the above analysis, including what further sources of information you would like to use to make a more informed decision (200 words max). [10 points]
. Be sure to embed and cite your references for any supporting images.
Perform the following analysis by analyzing a possible linear relation between two variables.
Option 1:
Using the data set provided from the NOAA for Manchester, NH, select any month between January 1930 and December 1958. Use the variables “MMXT” and “MMNT” for your analysis. Begin with your chosen month and analyze the next 61 data values (i.e. 5 years and 1 month) to determine if a relationship exists between the maximum temperature (MMXT) and the minimum temperature (MMNT).
Using Excel, StatCrunch, etc. create a scatter plot for your sample. Determine the
linear regression equation and correlation coefficient. Embed this scatter plot in your
initial post.
For your responses to your classmates (two responses required): Discuss the relationships between the scatter plot, the correlation coefficient, and the linear regression equation for the sample. Comment on the similarities and differences between your correlation and linear regression equation and that of your classmates. Why are there differences since you are drawing from the same population? Did you expect the differences will be large? Why or why not?
Option 2:
Write a mathematical scenario to describe each of the scatter plots.
Answer prompts made by fellow students with the following information:
Discuss an alternative scenario to represent the data in the scatter plots. In this scenario, assume there is correlation but where it would be inappropriate to conclude causation.
