Using an industry resource

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Apr 3, 2024

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Using an industry resource, such as the Wall Street Journal , research a current issue or controversy related to stockholders’ equity or EPS. Provide a link to the article along with a one-paragraph summary. Share how the issue or controversy should be resolved. Use the article below The Wall Street Journal article talks about a recent case involving Tyler Loudon, a resident of Houston. He admitted to committing insider trading after overhearing his wife, who used to work for BP, discussing a planned acquisition while she was working from home. It is alleged that Loudon made $1.76 million by trading shares based on the confidential information he overheard. The Securities and Exchange Commission (SEC) has filed charges against him, and he has also pleaded guilty to criminal charges from the U.S. attorney's office. This incident highlights the difficulties companies face in keeping information confidential when employees work remotely. This type of securities fraud, known as "pillow talk," occurs when insider traders obtain confidential information from their romantic partners. Loudon's guilty plea and the legal actions taken against him emphasize the importance for companies to establish strong measures to protect sensitive information and educate employees about the risks of insider trading. Resolving this issue involves legal consequences for Loudon and potentially increased awareness and preventive measures within companies to address the vulnerabilities associated with remote work. To address the recent incident of insider trading and strengthen internal precautions, the company should prioritize enhancing security protocols and providing comprehensive education and training to its employees. The first step is to invest in upgrading security protocols to better protect sensitive information, especially when employees are working remotely. This may involve implementing advanced encryption measures, secure communication channels, and strict access controls. By reinforcing these protocols, the company can minimize the risk of unauthorized access and accidental leaks of confidential information. Additionally, there is an essential need for effective education and training programs that raise awareness about the consequences of insider trading, focusing on the legal and ethical aspects. Through targeted training sessions, employees should be educated on the importance of maintaining confidentiality, particularly in the context of remote work. By promoting a deep understanding of the risks associated with mishandling confidential information, the company can ensure its employees act responsibly and ethically, thereby reducing the likelihood of similar incidents in the future. Lukpat, G. V. and A. (2024, February 23). Husband Who Eavesdropped on Wife’s Work Calls Pleads Guilty to Insider Trading. WSJ . https://www.wsj.com/finance/regulation/husband- who-overheard-wifes-bp-work-calls-pleads-guilty-to-insider-trading-5c6e22f4? mod=investing_news_article_pos3

It appears that your analysis identifies the lack of diversification as a potential cause for the challenges faced by SRS Investment Management, particularly due to the significant losses incurred with Avis Budget Group's stock. Diversifying the portfolio to mitigate risks seems like a prudent approach. Your the paragraph doesn't explicitly touch upon potential actions or strategies that Karthik Sarma or SRS Investment Management could take to navigate the specific challenges presented by Avis Budget Group's situation. What specific steps or adjustments do you believe Sarma should consider in his investment strategy to better position SRS Investment Management amidst the complexities of the car rental industry and the broader market conditions? Your thorough examination of Morgan Stanley's $249 million settlement effectively highlights the significance of accountability and adherence to regulatory standards in the financial sector. Your acknowledgment of the bank's efforts to enhance controls, cooperate with investigations, and implement internal reforms is in line with ethical principles and transparency. Your focus on rebuilding trust through improved internal controls and ongoing training demonstrates a practical approach to strengthening the financial system's integrity. Overall, your analysis provides a well-rounded perspective, recognizing the financial consequences while highlighting the potential for positive changes at Morgan Stanley and across the financial industry. How do you believe this settlement could impact other financial institutions in terms of promoting ethical behavior and regulatory compliance? Go to WileyPLUS / Course Resources / Data Analytics and Accounting and select the following resource: Data Analytics Lesson 03: Review Materials. Review the calculations for return on equity (ROE) and profit margin. Calculate these two ratios for a public company and also provide the earnings per share value(s) from the income statement in your post. Discuss the decisions the comoany may make from the results. Return on Equity (ROE), Profit Margin, and Earnings Per Share (EPS) are key financial ratios that provide insights into a company's financial performance and profitability. ROE is a measure of a company's profitability in relation to shareholders' equity. It is calculated by dividing net income by average shareholders' equity. Profit Margin indicates the percentage of revenue that remains as profit after expenses. It is calculated by dividing net income by revenue. EPS measures the company's profitability on a per-share basis. I chose the company Target to calculate the ratios for the year 2022. ROE = 432%

Gross Profit Margin = 24.64% EPS = $6.02 ROE is a way to see how well a company is using its equity to make money. An ROE of 432% is really high and could mean that Target is doing a good job with shareholder equity. A 24.64% margin shows that Target keeps about 24.64 cents from each dollar of sales after paying for the cost of goods sold. If the gross profit margin is in line with what other companies are doing, Target might want to focus on keeping things running smoothly. But if the margin is lower than competitors, Target might need to find ways to cut costs or talk to suppliers about better deals. With an EPS of $6.02, it means the company made $6.02 for each share. Target appears to be performing well based on the provided ratios. The choices the company makes will probably involve finding a balance between keeping up successful strategies, working on areas that need improvement, and telling stakeholders about its financial performance effectively. tgt-20230128 . (2023). App.quotemedia.com. https://app.quotemedia.com/data/downloadFiling? webmasterId=101533&ref=117321591&type=HTML&symbol=TGT&companyName=T arget+Corporation&formType=10-K&dateFiled=2023-03- 08&CK=27419#if1e8c8dd4b04440880a7ed27a0542767_109 When it comes to evaluating a company, it is important to calculate equity ratios before making a final decision regarding the investment. By determining a potential return from the investment, the investor/lender can decide whether or not to place their money within that company. The company I chose was Apple, and after calculating ROE I got 1.56 and for profit margin I got 0.44. I calculated ROE by taking Apple’s Net Income $96,995 and divided that by Total Stockholder Equity $62,146. When calculating the profit margin, I took the gross profit $169,148 and divided that by the total revenue/sales $383,285. The earnings per share (EPS) based on basic EPS not diluted is $6.16. These three ratios are not difficult to compute, but one must have access to the company’s financial statements either through SEC Edgar or the investor relations website. I find that sometimes it can be hard to remember the formulas for the ratios, which can be solved by googling the formula if needed. As an investor these three ratios can tell a lot about an investor’s potential return. For example, EPS measures how much return the shareholder would earn by owning just a single share of the company. ROE measures how much return the shareholder would earn by investing a dollar in equity. It also aligns with the profit margin, as ROE is its product. Respond to the dq above then ask a question to further the conversation. Pertain the question the EPS.

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Your explanation of Nike's financial ratios provides a clear understanding of how investors analyze the company's performance. ROE, profit margin, and EPS are crucial indicators for assessing financial health and profitability. Have you personally used financial ratios or other metrics to evaluate and make decisions about investments or financial matters? Let's delve into the calculations for Return on Equity (ROE), Profit Margin, and Earnings Per Share (EPS) for Chick-fil-A, a hypothetical public company, based on its income statement. Chick-fil-A's strong financial performance, with a 20% Return on Equity (ROE), allows the company to invest strategically in opportunities that provide higher returns than the cost of equity. This could mean exploring new markets, expanding product offerings, or investing in innovative technologies to strengthen its competitive position. By efficiently using shareholders' equity, Chick-fil-A has the financial flexibility to pursue ventures that support its long-term growth strategy. These strategic investments aim to boost profitability and solidify the company's market position, enhancing shareholder value and ensuring continued success in a dynamic business landscape.

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