2. What are the chief elements of Costco’s strategy? How good is the strategy? 3. Do you think Jim Sinegal has been an effective CEO?
This intrinsic value can show that how well the firm is run. Its cash flow and places a management competency in local. Intrinsic value is an important portion in value investing because of it allows Warren Buffett to indentify stocks and business. Which one undervalued. This is important for intrinsic value is value of firm’s business, not its stocks.
Costco Financial Analysis The purpose of this paper is to determine, if investing in Costco stock is profitable or not. To measure how manager effectively use the various source to achieve profit through evaluating the profitability performance ratio. The most important ratios are EPS, return on sales and return on equity. Earnings help stimulate growth and offer stockholders dividends. This paper discusses several aspects that make Costco a stable investment opportunity.
CASE STUDY Cost of Capital at Ameritrade 1. What factors should Ameritrade management consider when evaluating the proposed advertising program and technology upgrades? Why? Mr. Ricketts believes that his role as CEO is to maximize shareholder value by accepting any project whose expected return on investment is greater than the cost of capital. Therefore, the main factors that Ameritrade management should consider are the expected return on investment for the project, and how this compares to the project’s cost of capital.
2. Explain the rationale behind using beta as a measure of risk. Compute the company’s beta based on the divisional betas and compare it with that provided by ValueLine and Merrill Lynch. Explain some of the inconsistencies that can be found in reported betas. Do historical betas provide good measures of the future riskiness of firms (or divisions)?
Do they have experience with efficient integration & acquisition activity? Can management make it work? Does Endo have any international exposure plans in the future? If so, how much would international expansion translate to their bottom line, what % of sales figures? Emerging markets exposure?
Does GLCC have a sustainable competitive advantage in the additives industry? If so what is the source? Will their current business strategy prevent it from going forward? 5. Conduct a Value Chain Analysis for GLCC to identify value creating activities for GLCC.
14 Identify the firm’s present generic strategy. Does the present strategy fit with market forces? What supporting strategies do the firm use to compete? Has it been effective in establishing a sustainable advantage? 15 What are the strategic issues the firm must address to be competitive?
Examine their leverage · 75% Dividend payout… Should this percentage be lower? · Will they actually receive payment from distributors after providing credit on very relax terms? Is Bad debt only 2%? · Is the company aiming to grow too fast? I question this company’s ability to produce high profitability as indicated.
1. What is Costco’s business model? Is the company’s business model appealing? Why or why not? Costco’s business model is based on a best-cost strategy.