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Imagine that you are a chief financial officer with $150,000 of idle cash that you must...

Imagine that you are a chief financial officer with $150,000 of idle cash that you must invest to increase earnings for your company. Select at least two companies and the ratios you would use to determine your investment strategy. Based on the companies you choose, speculate on how the ratios are likely to change over the next five years.

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Answer #1

Being the Chief Financial Office of the company, the investment strategy to invest the idle cash of $150000 would to invest in two different sectors. The companies which would be selected to invest in are Amazon and Apple because of their growth pattern and good return to the investors. The ratios which have attract an investor to invest in the company are:

RATIOS AMAZON APPLE
Return on Equity 12.91 49.36
Interest Coverage 5.09 21.93
Current Ratio 1.04 1.12

The companies are having a good record towards the growth, regular dividend payments and having a positive current ratio showing keeping with great liquid assets to pay of the liabilities. As per the pattern of the growth of the companies, it could be well presumed that the companies turnover and the income would double in next five years.

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