As a potential investor, you decide to conduct a comprehensive financial analysis on your investment target, Nvidia Corporation (NVDA ). You collect its latest financial information. The current stock price is $868.17 per share, with the total of 2,590 million shares outstanding. Its latest income statement shows the revenues of $60, 922 million, costs of $16, 620 million, operating expenses of $11,329 million, interest expenses of $257 million, and the net income of $29, 760 million. Its latest balance sheet shows the inventory of $5, 282 million, total current assets of $44,345 million, total assets of $65, 728 million, total current liabilities of $10, 631 million, and total liabilities of $22,750 million. Answer the following questions based on the information given. a. What is the company's market to book ratio? The industry average market - to book ratio is 33.74. Based on your finding and the industry average, do you find the stock overvalued or undervalued? b. Compute the company's net profit margin and return on assets (ROA). Assume the corporate tax rate of 21%. c. What is its inventory turnover ratio? On average, how long does an inventory sit in the company before it is sold? d. Compute the company's current ratio. Based on the current ratio, do you see any potential red flag on its liquidity? Why or why not?
As a potential investor, you decide to conduct a comprehensive financial analysis on your investment target, Nvidia Corporation (NVDA ). You collect its latest financial information. The current stock price is $868.17 per share, with the total of 2,590 million shares outstanding. Its latest income statement shows the revenues of $60, 922 million, costs of $16, 620 million, operating expenses of $11,329 million, interest expenses of $257 million, and the net income of $29, 760 million. Its latest balance sheet shows the inventory of $5, 282 million, total current assets of $44,345 million, total assets of $65, 728 million, total current liabilities of $10, 631 million, and total liabilities of $22,750 million. Answer the following questions based on the information given. a. What is the company's market to book ratio? The industry average market - to book ratio is 33.74. Based on your finding and the industry average, do you find the stock overvalued or undervalued? b. Compute the company's net profit margin and return on assets (ROA). Assume the corporate tax rate of 21%. c. What is its inventory turnover ratio? On average, how long does an inventory sit in the company before it is sold? d. Compute the company's current ratio. Based on the current ratio, do you see any potential red flag on its liquidity? Why or why not?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:As a potential investor, you decide to conduct a comprehensive financial analysis on your investment target, Nvidia Corporation (NVDA
). You collect its latest financial information. The current stock price is $868.17 per share, with the total of 2,590 million shares
outstanding. Its latest income statement shows the revenues of $60, 922 million, costs of $16, 620 million, operating expenses of $11,329
million, interest expenses of $257 million, and the net income of $29, 760 million. Its latest balance sheet shows the inventory of $5, 282
million, total current assets of $44,345 million, total assets of $65, 728 million, total current liabilities of $10, 631 million, and total liabilities of
$22,750 million. Answer the following questions based on the information given.
a. What is the company's market to book ratio? The industry average market - to book ratio is 33.74. Based on your finding and
the industry average, do you find the stock overvalued or undervalued?
b. Compute the company's net profit margin and return on assets (ROA). Assume the corporate tax rate of 21%.
c. What is its inventory turnover ratio? On average, how long does an inventory sit in the company before it is sold?
d. Compute the company's current ratio. Based on the current ratio, do you see any potential red flag on its liquidity? Why or why
not?
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