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A $5,000 investment in a firm demands careful consideration on the part of the investor. I did
a ratio analysis of the company's finances utilizing the available data in order to make a well-
capital structure were examined. The purpose of this paper is to analyze the data and draw
Investment decision
According to the report's financial metrics, the company is in solid financial standing.
Profitability metrics like Gross Profit Margin and Net Profit Margin demonstrate disciplined
management of expenses and healthy returns on investment. Return on Equity (ROE) and
Return on Assets (ROA) indicate that the company is making money off of its equity and
assets.
Measures of liquidity such as the current ratio, quick ratio, and working capital ratio all point
to the company's strong liquidity and its ability to satisfy its short-term commitments.
According to the solvency ratios, which also consider the debt-to-equity and total-debt-to-
total-assets ratios, the company has a healthy capital structure with a manageable level of
debt in relation to its equity and assets. The Times Interest Earned ratio indicates that the
company is financially stable since its operating profits much exceed its interest expenses.
The efficiency ratios, especially Total Asset Turnover, suggest that the company might do a
The firm is a financially attractive investment opportunity due to its superior profitability,
liquidity, and solvency. It is important to remember that financial ratios only provide a
snapshot of a company's performance, and that other factors, such as the outlook for the
sector, the level of competition, the management team, and potential future development,
With the specified budget of $5,000, we may create a diverse investment portfolio.
Diversifying an investment over a number of asset classes or investment types may reduce
overall risk and provide more consistent results. There are a few ways to spread out a $5,000
bet:
1. Equity Share Investment: I plan to invest some of the funds in the firm by purchasing
stock shares. Equity shares, as was previously mentioned, might potentially provide higher
returns via dividends and capital appreciation. The company's financial metrics demonstrate a
high level of profitability, including a decent Gross Profit Margin (43.00%) and Net Profit
Margin (34.03%). The return on equity (ROE) of 24.13 percent and the return on capital
employed (ROCE) of 20.63 percent demonstrate the company's profitability. Those who want
2. Investment in Debenture Shares: A second portion of the investment, say $1500, will be
used to acquire debentures issued by the firm. Debentures, which provide fixed interest rates,
may be a reliable way to make money. Based on its debt-to-equity ratio (1.02) and total debt
to total assets ratio (0.5), the company has a reasonable level of debt (0.50). Debenture shares
appeal to risk-averse investors because of their stable dividend payout and low volatility.
3. Varied Mutual Fund: Put the remaining $500, for example, into a mutual fund with a
wide range of investments. By combining the resources of many investors, a mutual fund
may buy a wide variety of securities at once. Mutual funds, which invest in a wide range of
companies and industries, allow me to further spread my risk. I should look for a mutual fund
that has a track record of consistent returns and a low expense ratio.
Conclusion
The firm is a top pick for the $5,000 investment fund based on a thorough analysis of
financial data. The company's ability to manage costs and increase revenue is reflected in
strong profitability measures including a high Gross Profit Margin and a respectable Net
Profit Margin. In addition, profitable asset utilization and a healthy return on equity (ROE) or
return on assets (ROA) are indicators of a successful business model. The company is solvent
and has a good liquidity ratio, showing it can cover short-term commitments and keep its
capital structure in check. By diversifying your holdings between stock, debenture, and a
mutual fund, you may increase the likelihood of stable returns while decreasing your
exposure to dangers associated with any one company. The numbers back up our choice to