Investment Analysis

Investment Analysis

Introduction & Purpose

To maximize wealth investment should be made carefully as failure to do so can be hazardous with little or no remedy. The essay is written in order to analyze the investment and recommending on financial grounds only which company to invest from Oracle, Sony and Darden. The purpose of the essay is to highlight the financial performance of the three entities mentioned above and their share performance and recommending which company to go for.

Discussion

Financial Performance (2009)

Oracle

Sony

Darden

Liquidity: Current ratio

2.03

0.95

0.51

Profitability: N.P margin

24%

-1.28%

5.16%

Investor: Return on Equity

23.25%

-3.08

24.69%

Financial Performance (2010)

Oracle

Sony

Darden

Liquidity: Current ratio

1.84

1.02

0.54

Profitability: N.P margin

22%

-0.57%

5.69%

Investor: Return on Equity

21.95%

-1.38

23.11%

Financial Performance (2011)

Oracle

Sony

Darden

Liquidity: Current ratio

2.76

0.93

0.52

Profitability: N.P margin

24%

-3.61%

6.35%

Investor: Return on Equity

24.22%

-9.42

24.87%

When discussing 2009, Oracle had a current ratio of 2.03:1 whereas Sony had a current ratio of 0.95:1 and Darden restaurants had current ratio of 0.51:1. Current ratio represents the amount of current / liquid assets a company has to pay off its current liabilities. Thus it can be stated that only Oracle out of the above three is in a position to comfortably pay off its short term debts.

In 2009 Oracle had a net profit margin of 24% while Sony had a net profit margin of -1.28% and Darden had a net profit margin of 5.16%. Clearly it can be seen from this that profitability wise Oracle is leading the race.

In 2009 Oracle had a return to equity of 23.25% while Sony had a return to equity of -3.08% and Darden had a return to equity of 24%. From this perspective it can be concluded that both Darden and Oracle are running head to head.

When discussing 2010, Oracle had a current ratio of 1.84:1 whereas Sony had a current ratio of 1.02:1 and Darden restaurants had current ratio of 0.54:1. Current ratio represents the amount of current / liquid assets a company has to ...