Assessing Company Performance (Coursework Sample)

Assessing Company Performance Student's Name Institutional Affiliation Course Instructor Date Assessing Company Performance Financial Measure and Meaning to Firm The market valuation ratio is one of the key financial measures that the company could use in assessing its financial strengths. This metric refers to the set of financial metrics that companies rely on to provide insights into how the market values a specific stock. The financial measure is also essential in evaluating a company's performance, especially considering how it underscores whether a stock is overvalued, undervalued, or fairly priced. Based on this information, they determine the level of investment they could pump into company projects (Fernandez, 2019). Several market valuation ratios can guide investors in assessing the performance aspect. First, the price-to-earnings ratio is essential in comparing the company's stock price to earnings per share. In this assessment, a valuation revealing a high price-to-earning ratio is indicative that investors are willing to pay a premium for the company's profits (Hirdinis, 2019). Thus, this indicator aspect is associated with high growth expectations. Besides the price-to-earnings ratio, another essential market valuation ratio is the price-to-sales, which measures the company stock price based on its relation to the revenue per share. The formula for calculating the market valuation ratios is as follows. Price to Earnings (P/E) Ratio: Stock price/earnings per share. Price to Sales (P/S) Ratio: Stock Price/Revenue Per Share Comparing the Performance Measure to the Industry's Average In assessing the market valuation ratios, the fundamental goal is determining whether the company's stock is trading at a premium or a discount relative to the industry average. Based on the data provided for Andrews, Baldwin, Chester, Digby, Erie, and Ferris, the first step of evaluating the market valuation ratio is determining the market cap and the EBTI. Based on the data provided on the Baldwin, comprising a market cap of 87 million and EBTI of $19 million. Using the formula P/E Ratio =Market CapEBTI P/E Ratio=8719 = 4.57. The rest of the companies' P/E ratios were 6.69. 5.32. 5.87. Based on this formula, to assess this market valuation ratio against the industry's average, the strategy is to calculate the P/E ratios for the rest of the companies, which will be assessed as Industry Average P/E Ratio= Sum of IndividualPERatiosNumber of Companies. Therefore, based on this formula, 4.57+6.69+5.32+5.87+5.396= 3.75. Based on this comparison, it is notable that the company's average is higher than the industry's and, thus, could be considered attractive to investors. Customer Buying Criterion and Company's Relative Position The customer buying criteria, comprising the key factors or requirements that influence a customer's decision-making process, is an essential part of the company's strategic decisions. One of the criteria listed is prices, considering that the cost of products and services is one of the fundamental aspects infl...