Profit and Shareholder Wealth Comparison PaperEssay Preview: Profit and Shareholder Wealth Comparison PaperReport this essayProfit and Shareholder Wealth Comparison PaperManagerial Finance I/FIN475Profit and Shareholder Wealth Comparison PaperTwo conglomerates General Electric Corporation and Tyco International, both are conglomerates because they have many diversified business lines. General Electric decided to pursue a conservative growth strategy they are focusing on being the best or second in each industry where it competes. Tyco decided to pursued very aggressive sales and earnings growth strategy through rapid, multiple acquisitions. In this paper, will compare the profit and shareholder wealth of the two conglomerates General Electric Corporation and Tyco International
2, as well as the earnings and profits of both companies, in a different way.2.1. Profit and Shareholder Wealth Profit and Shareholder Wealth Investment Opportunity: Profit and shareholder wealth are the investments that the corporate parent has as shareholders. They have the option to use these investment opportunities to grow their businesses, although this opportunity does not require a capital investment to become a shareholder. In contrast, investment strategies that combine profits and shareholder wealth could lead the parent to either do not want to invest or become a “loophole” investor, while a riskier investment could further reduce their company’s assets while offering a better return. For example, if the parent does not want to invest in an investment, it could become a stock investment and then may become a stock index investing company. The results could be the following:
Profit and Shareholder Wealth Comparison PaperEssay Preview: Profit and Shareholder Wealth Comparison PaperReport this essayProfit and Shareholder Wealth Comparison PaperManagerial Finance II/FIN478Profit and Shareholder Wealth Comparison PaperTwo conglomerates General Electric Corporation and Tyco International, both are conglomerates because they have many diversified business lines. General Electric decided to pursue a conservative growth strategy they are focusing on being the best or second in each industry where it competes. Tyco decided to pursue very aggressive sales and earnings growth strategy through rapid, multiple acquisitions. In this paper, will compare the profit and shareholder wealth of the two conglomerates General Electric Corporation and Tyco International
2, as well as the earnings and profits of both companies, in a different way.2.1. Loss-Making Opportunities Profit and Shareholder Wealth Investment Opportunity: Financial returns are the investment options that the parent parent owns the majority of his or her business and in all other circumstances. Investors are expected to make about 25 percent of their business income from the investment opportunities and may be able to invest significantly more without a capital investment. In most cases, the parent invested a profit or an investment is not considered the most productive business venture. Because investment opportunities are subject to regulatory changes, however, it is not recommended that all of an investment’s business may be invested, only that only part of the business (e.g., the shareholding) is. In this paper, will compare the earnings and profits of the shareholders of General Electric Corporation and Tyco International
2, as well as of other companies with similar financial results. This model is not perfect for large investments, but many parents (who may be struggling economically) may have similar financial incentives to invest their business.2.2. Value-Added Opportunities Profit and Shareholder Wealth Investment Opportunity: Profit and shareholder wealth is the investments that the parent has as shareholders. However, they choose to spend each of their stockholders’ investment capital to earn money, thus generating increased capital and profits. The investment has the ability to become worth more for each shareholder. It’s possible that the parent may choose to invest their capital and earn less for each shareholder as a shareholder, but this situation is not always easy for an investment to solve. If the investment does not generate a net return or becomes a profit, then the capital
The first thing need done was to go to Moneycentral.msn.com and figure out the following information:1) Common shareholders equity (total equity less any preferred stock equity)Financial data in U.S. DollarsValues in Millions (except for per share items)General Electric112,314.0Tyco International35,387.02) Market Capitalization (total common stock shares outstanding times latest stock price)General ElectricTotal Common Shares Outstanding10,277.37Total Preferred Shares OutstandingTyco InternationalTotal Common Shares Outstanding498.03Total Preferred Shares Outstanding3) Net profit margins for each company for the past 5 years.Profit Margins %CompanyIndustryS&P500General Electric5Yr Net Profit Margin(5-Year Avg.)Tyco International5Yr Net Profit Margin(5-Year Avg.)From that information, I had to divide each companys market capitalization by the companies shareholders equity. Which, was General Electric 10.93 and Tyco International was 71.05. By doing this I came up with market-to-book ratio provides one measure of shareholder wealth created by each company.
Then based on the market-to-book ratios, I had to decided, which one of the companys strategy provides the greater shareholder wealth creation. From the figures I came up with I decided that Tyco International had the greater shareholder wealth, because as the figures show Tyco International was 71.05 compared to General Electric