How do beta, market capitalization, trade volume, and cash flow activities translate to a company’s competitive advantage?
Part One
Return to the same MS Excel file you submitted for memo 3. Under the Week 4 tab, gather the market capitalization, daily trade volume/average trade volume, beta, cash flow for operating, investing, and financing, capital expenditures, and free cash flow information about your chosen company and its closest competitor.
Part Two
In a memo to the Chief Executive Officer, answer the following questions, which are pre-loaded in your Memo Template:
Beta is a measure of a stock’s volatility in relation to the overall market. To learn more about beta, visit What Beta Means When Considering a Stock’s Risk. (What Beta Means: Considering a Stock’s Risk (investopedia.com)Market capitalization refers to the total dollar market value of a company’s outstanding shares of stock. Considering this information, how does your chosen company’s beta, market capitalization, and trade volume compare to that of the chosen competitor? Can you draw any conclusions from the company’s competitive advantage using this information? What data, reference, or ratios drew you to that conclusion?
After analyzing and interpreting the cash flow for operating, investing, and financing, as well as capital expenditures and free cash flow information, which company is receiving more money, spending more money, and has more money in free cash flow? Considering that a dollar today is not worth a dollar tomorrow, which company appears to be a better steward of its capital? What data, reference, or ratios drew you to that conclusion?
Which of the two companies is the “better run company”? (Keep in mind that you will get posed this question for the next several weeks. Track how you grow from this week to the next week with your response.)
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