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Money Management(Question #1, #2, and #3)Student Name:Student ID:Course Name:Course ID:Faculty Name:University Name:
Table of ContentsQuestion 1a: Investing in a Company........................................................................................2References..............................................................................................................................4Question 2: Investment Strategy Based on Funds......................................................................6Introduction............................................................................................................................6Self-Analysis..........................................................................................................................6Understanding Risk Profiles..............................................................................................6Self-Assessment.................................................................................................................7Identifying Risk Profile......................................................................................................9Macro-Economic View..........................................................................................................9Asset Allocation...................................................................................................................12Conclusion............................................................................................................................14References............................................................................................................................15Question 3: Invest in a bond.....................................................................................................17References............................................................................................................................18
Question 1a: Investing in a CompanyThe company that has been selected for assessment is Coca Cola Company. Coca Cola is abeverage company. At present the company has more than 500 non-alcoholic beveragesunder its brand. There are various forms of beverages that are supplied by the companyaround the world. Most of them are sparkling and others belong to still beverages. Thecompany came into existence in the year 1886. After the purchase of the company ErnestWoodruff in the year 1919, the company has made many innovations. The company waspurchased by Ernest at the valuation of $25million (Pendergrast, 2000). Some of theinnovative elements of Coca Cola are twelve ounce cans, standardizing carton having sixbottles, and others. The product of the company is present in most of the countries around theworld and it is functioning appreciably well (Miller, 1998). Around 130 years of service ofthe company is appreciable and it shows that people from around the world has shown faithin the company as it has continuously grown in value since its inception. In the year 2012, thecompany announced that it will be entering Burma with its distribution of products.Considering this announcement, it can be stated that the company is now present in almost allthe countries around the world except Cuba and North Korea.The company is listed on the New York Stock Exchange. There are multiple competitors forthe company in the local market and at the global market the company has some biggercompetitors such as PepsiCo and others. The market in which the company is operating isglobal in nature and therefore the changes in the economic situation of any country makessubstantial impact on the company’s profitability. However, due to its wide presence, most ofthe times loss generated in one location are mitigated with the profits from others. Therefore,considering the size of the company, its wide presence, and the future intention of the globaleconomy, the investment in this company can be suggested. However, the size of the
company should not be the selection criteria always. While moving ahead with the discussionit should be stated here that the US Market has been considered in general to understand therelationship of various factors if encountered.As per the US market is concerned, the beverage industry has two categories in general, theyare alcoholic and non-alcoholic. The products of Coca Cola Company come under the non-alcoholic category. The overall beverage industry of the United States is generating aroundmore than $140 billion per year in revenue. The pricing strategies, packaging and othermarketing elements are the key to master if a company is willing to operate in this industry(Kim and Zheng, 2017). At present, the non-alcoholic market of US is around 60%. One ofthe key aspect that has come up as per the US market is concerned, that the market has gainedgreater degree of saturation and this has impacted the growth aspects. Considering this, onecan state that the developing markets outside United States is still an option, even for CocaCola, which there is no doubt company is willingly pursuing.The gross profit margin for the company is high. At present it is at 64.61% (Stock Analysison Net, 2017). However, the profit margin should not be the indication of appreciation as incomparison to the last year, the profit margin has decreased. Even if the profit margin isshowing fluctuation, if the overall industry is considered then it can be stated that thecompany’s profit margin trend has diligently followed the trend of the industry. Interestingly,the major change can be witnessed in the net income of the company. In the previous year,the net income of the company was $1237.00 million however in the current year the netincome fell to $550.00 million. The 55.5% decrease in the net income can be witnessedwhich is indicating towards some major challenges (Ycharts.com, 2017). At present, thecompany’s debt to equity ratio is 1.98. The debt to equity ratio is high in an unprecedentedmanner and it can be stated that there is the need of some improvement in the management of
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