Running head CURRENT ECONOMIC TRENDS1CURRENT ECONOMIC TRENDS .docx

Running head: CURRENT ECONOMIC TRENDS 1
CURRENT ECONOMIC TRENDS 3
Current Economic Trends
Jonathan Max Burkett
Capella University
January 13, 2019
Current Economic Trends
An economy is the management and utilization of a country’s
resources to create the desired stability in terms of industry,
money, and trade. Economies of countries rely on a network of
purchase and sale of goods, taxes, and savings made by the
central bank in terms of investment (Pons, 2000). A country’s
economic stability is achieved when the wealth the industry and
service sector are producing outweigh the money being spent.
Trends refer to the socio-economic advancements of interests
among commodities, music, films, fashion, and finance. Trends
are mostly affected or influenced by affluent individuals or
groups in society. In the 21st century trends have earned a
position in the financial and economic sectors of the world as
economy determining factors.
Industries are setups used to collect raw material of different

kinds and manufacture and process them to attain a finer
product than the original raw material. Around the world global
consumerism has resulted in the construction of varieties of
industries ranging from food, textiles, machinery, and
agriculture. Industries may either be service or manufacture and
processing. Modernization promotes the industrial revolution
due to the demand for complex and efficient products (Baten,
2016). The availability of a vast selection of products has seen
an annual influx of newer companies that offer better and more
complex products. Economically there are two types of
industries; cyclical and non-cyclical industries.
Cyclical industries are business or organization tied to market
and price variations. Fluctuation within a business’s year
affects the cyclical industry directly. Positive growth within the
business boosts the business while negative growth results in
the collapse of a business (Gordon & Robert J, 2000). Cyclical
industries' activities move with an annual or seasonal business
cycle. Examples of cyclical industries include the auto, airlines,
housing, furniture, appliance, and financial services industries.
Non-cyclical industries maintain their overall business
performance all year round. Differences in productivity have
little to no effect on business operations. Non-cyclical
industries remain fairly constant over time. These include such
industries as food, pharmaceuticals, utilities, and cosmetics.
American airlines have recently merged with US airlines
expressing a steady growth percentage of 93%. Lawsuits,
devastating weather patterns, and competition have seen the
airline struggle through the past years with the stock prices
dropping and insignificantly rising through it all. Apple, a
technological giant amongst mobile and personal computer
manufactures, has been on the rocks for quite some time. A
collapse in iPhone sales has seen the company struggle to
maintain the productivity of its stock. This is due to iPhones
making up 60% of Apple’s revenue. Bank of America has seen a
steady decline in the value of its stock resulting in poor
economic efficacy.

Ameren, an electrical company has seen a steady rise in
earnings the past year with plans to venture into wind
technology to increase production. Competition from various
electrical companies has seen a decline in prices prompting
newer investment ventures. GlaxoSmithKline pharmaceuticals
the past financial year experienced a revenue generation of $24
billion. The company’s growth has seen it buying companies
like Tesoro. Global food industries have invested in building
additional production industries to keep up with on-trend items
and consumer demands.
Global demand has seen an increase in the gross domestic
product due to the expansion of the industrial world into Asia
and Europe. This means available market possibilities for
exports and competition are just but a few benefits (Zipfe,
2012). Rising middle class create a market platform for foreign
goods around the world. Investments opportunities are some of
the major reforms the economic sector has undertaken. The
leniency of tax on specified sectors and goods leaves consumers
with more to spend promoting faster growth and increased GDP
and the overall economy.
Volatile deployment of funds creates opportunities, increasing
average returns, fixed incomes, and currencies while creating
market equality. Rate-sensitive assets should be allocated less
in order to reduce the negative effects of rising rates.
Incorporation of international assets promotes steady growth
and stabilization of currencies. Cyclical industries are the major
drivers of a state’s economy despite the consistency of non-
cyclical industries.

References
Baten, Jörg (2016). A History of the Global Economy. From
1500 to the Present. Cambridge University Press
Gordon, Robert J. (2000), Long term productivity in the U.S.
Pons, Jordi (January 2000). Journal of Forecasting. Wiley. 19
(1): 53–63.
Zipfel, F., 2012. Economic and European Policy issues.
Deutsche Bank AG
Running head: FULL SECURITY ANALYSIS
1
FULL SECURITY ANALYSIS
7
Full Security Analysis
Capella University
Ford motor financial analysis
Ford motor company is my choice for analysis in this case study
and it forms part of my portfolio. The company operated in the
vast automobile industry will its operations being spread across
all over the world. The article will simply report the full
security analysis while comparing it to the industry ratios.

The first ratio is the price to earnings ratio which is simply the
price of the companies stock divided by the earnings per share.
The ratio is currently at $ 27.22 and this means that the investor
have to pay 22 dollars in order to get a dollar return to their
investments at ford motors. The ratio is consistence with the
industry ratios since an investor has to pay an average of $30 in
order to get a dollar return in the automobile industry, it
therefore shows that the company is performing well in relation
to the industry.
The price to book ratio is a not commonly used in analyzing
stocks but is a very important ratio in determine the worthiness
of a company’s stock, the price to book ratio shows how an
asset is valued depending on the owners’ equity. The ratio is
calculated by dividing the stock price with the book value per
share. A price to book ratio of less than one is considered very
attractive and sows that the share is not undervalued. The ford
motors price to book value is 0.01 and is therefore very
attractive to potential investors. The industry price to book ratio
is at 1.54 and therefore the company is performing better than
the industry average.
The profit margin is a common term in income analysis and
simply means the percentage of sales that is converted into
profit after deducting the company’s cost of goods sold. Ford
motors profit margin is at 11% while the industry’s profit
margin is at 14.82 and therefore the company is performing
poor compared to the industry, it shows that the company is
manufacturing at a higher cost or selling at lower price
compared to the industry average. Another important ratio is the
dividend yield, it is the amount investor’s gain in form of
dividends relative to the company’s market price per share. The
company’s dividend yield is at 2% while the market dividend
yield is at 1.34% and this shows that the company’s payout ratio
is higher than the industry’s payout ratio, as an investor, that is
a positive factor in valuation of the stock.
Finally the earnings growth rate is the rate at which the
company’s net earnings are changing. The earnings growth rate

is simply the percentage change of the company’s previous
earnings per share compared to the most current earnings per
share. Ford Motors Company scores a -52% in earnings growth
estimate and this is not an attractive figure, the company has
too work hard to ensure that earnings growth rate is positive.
The industry growth rates were estimated to be -13.3 and this
shows that the company’s earnings have a positive relationships
with the industry growth rates.
The most important ratio to the investor is the beta of a stock,
the stock beta is simply the risk coefficient of a stock in
relation to a benchmark asset or stock. The company’s beta is at
0.182 and several deductions can be made from the stocks beta.
First, the stock has a positive relationship with the market
movement although the relationship is very minimal, this is due
to the fact that the stock beta has a positive coefficient which is
less than five and therefore no a strong relationship. For the
investors, the stock can be used in risk diversification since the
relationship is not much strong. The ratios and the calculations
helps in analyzing the stock that is in your portfolio so as to
develop expectations and to know how the stock relates to the
industry, it is the tool investors use to determine the stocks to
invest into.
Appendices
Earnings Estimate
Current Qtr. (Mar 2019)
Next Qtr. (Jun 2019)
Current Year (2019)
Next Year (2020)
No. of Analysts
14
14
21
18

Avg. Estimate
0.28
0.29
1.26
1.41
Low Estimate
0.16
0.15
0.95
0.72
High Estimate
0.37
0.37
1.45
1.9
Year Ago EPS
0.43
0.27
1.3
1.26
Revenue Estimate
Current Year (2019)
Next Year (2020)
No. of Analysts
10
10
16
15
Avg. Estimate
37.47B
35.72B
145.92B
147.55B

Low Estimate
35.34B
33.6B
139.7B
138.62B
High Estimate
39.1B
37.83B
156.05B
156.38B
Year Ago Sales
39.01B
35.91B
148.29B
145.92B
Sales Growth (year/est)
-3.90%
-0.50%
-1.60%
1.10%
Earnings History
3/30/2018
6/29/2018
9/29/2018
12/30/2018
EPS Est.
0.41
0.31
0.28
0.32
EPS Actual
0.43
0.27
0.29
0.3

Difference
0.02
-0.04
0.01
-0.02
Surprise %
4.90%
-12.90%
3.60%
-6.30%
EPS Trend
Current Year (2019)
Next Year (2020)
Current Estimate
0.28
0.29
1.26
1.41
7 Days Ago
0.28
0.32
1.3
1.49
30 Days Ago
0.3
0.34
1.33
1.53
60 Days Ago
0.3
0.34
1.33
1.54

90 Days Ago
0.3
0.34
1.32
1.52
EPS Revisions
Current Year (2019)
Next Year (2020)
Up Last 7 Days
N/A
1
1
1
Up Last 30 Days
2
3
3
2
Down Last 7 Days
N/A
N/A
N/A
N/A
Down Last 30 Days
1
N/A
N/A
N/A
Growth Estimates
F
Industry
Sector

S&P 500
Current Qtr.
-34.90%
N/A
N/A
0.10
Next Qtr.
7.40%
N/A
N/A
0.04
Current Year
-3.10%
N/A
N/A
0.15
Next Year
11.90%
N/A
N/A
0.08
Next 5 Years (per annum)
3.80%
N/A
N/A
0.12
Past 5 Years (per annum)
2.86%
N/A
N/A
N/A
Income Statement
All numbers in thousands
Revenue
12/31/2018
12/31/2017

12/31/2016
12/31/2015
Total Revenue
-
156,776,000
151,800,000
149,558,000
Cost of Revenue
-
140,197,000
134,616,000
131,410,000
Gross Profit
-
16,579,000
17,184,000
18,148,000
Operating Expenses
Research Development
-
-
-
-
Selling General and Administrative
-
9,770,000
12,597,000
10,097,000
Non Recurring
-
-
-
-
Others
-
-

-
-
Total Operating Expenses
-
149,967,000
147,213,000
141,507,000
Operating Income or Loss
-
6,809,000
4,587,000
8,051,000
Income from Continuing Operations
Total Other Income/Expenses Net
-
1,339,000
2,209,000
2,201,000
Earnings Before Interest and Taxes
-
6,809,000
4,587,000
8,051,000
Interest Expense
-
-1,136,000
-899,000
-773,000
Income Before Tax
-
8,148,000
6,796,000
10,252,000
Income Tax Expense
-
520,000

2,189,000
2,881,000
Minority Interest
-
126,000
113,000
109,000
Net Income From Continuing Ops
-
7,628,000
4,607,000
7,371,000
Non-recurring Events
Discontinued Operations
-
-
-
-
Extraordinary Items
-
-
-
-
Effect Of Accounting Changes
-
-
-
-
Other Items
-
-
-
-
Net Income
Net Income
-

7,602,000
4,596,000
7,373,000
Preferred Stock And Other Adjustments
-
-
-
-
Net Income Applicable To Common Shares
-
7,602,000
4,596,000
7,373,000
Balance Sheet
All numbers in thousands
Period Ending
12/31/2018
12/31/2017
12/31/2016
12/31/2015
Current Assets
Cash And Cash Equivalents
-
8,934,000
7,828,000
5,386,000
Short Term Investments
-
17,554,000
19,642,000
18,181,000
Net Receivables
-
10,599,000
11,102,000
11,042,000

Inventory
-
10,277,000
8,898,000
8,319,000
Other Current Assets
-
2,631,000
3,145,000
2,704,000
Total Current Assets
-
115,902,000
108,461,000
102,587,000
Long Term Investments
-
3,347,000
3,523,000
3,244,000
Property Plant and Equipment
-
36,901,000
33,692,000
32,177,000
Goodwill
-
75,000
50,000
6,000
Intangible Assets
-
213,000
198,000
124,000
Accumulated Amortization

-
-
-
-
Other Assets
-
18,426,000
14,894,000
16,154,000
Deferred Long Term Asset Charges
-
10,973,000
9,705,000
11,509,000
Total Assets
-
257,808,000
237,951,000
224,925,000
Current Liabilities
Accounts Payable
-
22,115,000
21,296,000
20,272,000
Short/Current Long Term Debt
-
1,960,000
1,361,000
961,000
Other Current Liabilities
-
18,299,000
16,277,000
16,084,000
Total Current Liabilities

-
94,600,000
90,281,000
82,336,000
Long Term Debt
-
12,575,000
13,222,000
11,060,000
Other Liabilities
-
24,419,000
25,086,000
23,959,000
Deferred Long Term Liability Charges
-
-
-
-
Minority Interest
-
126,000
113,000
109,000
Negative Goodwill
-
-
-
-
Total Liabilities
-
222,792,000
208,668,000
196,174,000
Stockholders' Equity
Misc. Stocks Options Warrants

-
-
-
-
Redeemable Preferred Stock
-
-
-
-
Preferred Stock
-
-
-
-
Common Stock
-
41,000
41,000
41,000
Retained Earnings
-
21,218,000
15,634,000
14,414,000
Treasury Stock
-
-8,212,000
-8,135,000
-7,234,000
Capital Surplus
-
21,843,000
21,630,000
21,421,000
Other Stockholder Equity
-

-6,959,000
-7,013,000
-6,257,000
Total Stockholder Equity
-
34,890,000
29,170,000
28,642,000
Net Tangible Assets
-
34,602,000
28,922,000
28,512,000
Running head: INVESTMENT PORTFOLIO
1
INVESTMENT PORTFOLIO
5
Investment Portfolio
Capella University
Investment Portfolio
As an investor, I would like to invest in a stock portfolio
comprising of 3 stocks from cyclical industry and 3 stocks from
non-cyclical industry. My objective is to earn reasonable gains

in exchange for lower stress levels and adequate free time. As
such, I would like to buy stocks from established firms and hold
the portfolio investment for 5 years. With this in mind, the 6
stocks that will be in this investment portfolio are Toyota
Motors Corporation, Ford Motors Company, Fiat Chrysler
Automobiles, Novartis AG, and Pfizer Incorporation as well as
Eli Lilly and Company. Whereas the first three stocks are from
a cyclical industry, the remaining three stocks are from a non-
cyclical industry.
For this portfolio, I intend to use the index investor style
by passively investing in funds that do not only follow indices,
but also receive an average rate of return. According to Tang &
Xiong (2012) index investing style became popular in the bull
market during 1980 to 2000. This kind of investment strategy
does well in the bull markets but poorly in the bear markets. It
produces fair rates of return and less expense. The authors
assert that index investing strategy is appropriate for investors
who lack the knowledge and the desire to invest their time and
energy into individual investment opportunities.
All investments involve risk taking. This investment
portfolio is subject to macroeconomic, political and industrial
events that may affect the return of the portfolio. Regarding
macro-economic factors, Elton et al. (2009) indicate that
various issues such as gross domestic product, interest rates and
inflation as well as taxation policy may affect an investment
portfolio. Interest risk may arise if the United States Federal
Reserve attempts to manage the country’s economy. Central
banks decision to increase or reduce the amount of money
circulating in an economy can lead to a rise or a fall in interest
rates. Changes in interest rates can affect the value of income
generating assets like stocks, bonds and real estate. As most
investments have long time horizon, they are prone to inflation
risk. Political events such as Brexit may also affect an
investment portfolio. Regarding industrial events, changes in
production techniques and new innovations may affect the
performance of an organization, thereby affecting its stock price

either positively or negatively.
The initial holding consists of Ford Motors, Toyota
Motors, Fiat Chrysler, Novartis AG, and Pfizer Incorporation as
well as Eli Lilly and Company. Out of the $100,000 available
for investment, I intend to invest $30,000 in Eli Lilly and
Company’s stock, $ 25,000 in Novartis AG’s stock, $20,000 in
Pfizer Incorporation’s stock, $10,000 in Fiat Chrysler’s stock,
$10,000 in Ford Motors’ stock and $5,000 in Toyota Motors’
stock. This decision is made on the company’s closing stock
prices as of January 17, 2019. Eli Lily and Company’s stock
price closed at $119.16, Novartis AG stock closed at $88.63,
and Pfizer Incorporation’s stock closed at $42.47. Concerning
the automobile industry, Fiat Chryslers stock closed at 14.54
euro on the Milan stock exchange whereas Ford Motor’s stock
closed at $8.36. Toyota Motors’ stock price closed at 6,816
Japanese Yen on Tokyo Stock Exchange. The other factors that
I put into consideration include: class of investment assets, the
prevailing industrial events, the country of origin, and short-
term as well as long-term investment objectives.
Market Value of the Portfolio
Weights of stock
Stock
Weight
Expected return
Eli Lily and Company’s
30,000/100,000 =0.3
10%
Novartis AG
25,000/100,000=0.25
10%
Pfizer Incorporation’s
20,000/100,000=0.2
10%
Fiat Chryslers
10,000/100,000 = 0.1
5%

Ford Motor’s
10,000/100,000=0.1
5%
Toyota Motors’
5,000/100,000 = 0.05
3%
Expected rate of return = WA x ErA + WB x ERB +-------WN x
ErN
= (0.3) (10%) + 0.25(10%) + 0.2(10%) +0.1(5%) +
0.1(5%) + 0.05(3%)
=3%+2.5%+2%+0.5%+0.5%+0.15%
= 8.65%
Benchmarking is very important in investment decision.
Elton et al. (2009) define a benchmark as an alternative to an
investment portfolio against which investors can measure a
portfolio’s performance. Comparing an investment portfolio’s
returns against a benchmark may help in tracking errors. By
tracking errors, an investor can get an insight of how tight or
volatile the portfolio in question is relative to the benchmark.
As such, benchmarks help in measuring returns, risks and
determining whether or not the added return adequately
compensates the risks involved. For this portfolio, I will use the
Standard and Poor 500 index (S&P 500) benchmark. The
Standard and Poor 500 Index is one of the most commonly used
benchmarks by investors.
This portfolio investment is prone to two significant risks-
sector risks and political risks. Regarding sector risks, the
automobile industry has recently witnessed various scandals
that have led to car recalls, and this may affect the stock prices
of Toyota, Fiat Chrysler and Ford Motors. For instance, Price
(2018) indicates that Toyota had to recall more than 1 million
vehicles in 2018 because of airbag defects, which may not only
affect the company’s profitability but also stock prices. With
regards to political event, Brexit may adversely affect not only
the European business and finance environment, but also the

United States economy. Breinlich et al. (2018) indicate that the
legal framework plus the regulatory standards in the United
Kingdom financial market are very strong, providing excellent
projections to investors. Also, changes in regulations and laws
in the United States, Japan and/ or Italy may negatively affect
the stock prices of the portfolio investment. The portfolio may
also be affected by a market risk like the financial crisis of
2008 which resulted in market values, including stock prices, of
even profitable organizations decreasing significantly. This
investment is appropriate for investors whoseobjective is to
earn reasonable gains in exchange for lower stress levels and
adequate free time
References
Breinlich, H., Leromain, E., Novy, D., Sampson, T., &
Sampson, T. (2018). The economic effects of Brexit-evidence
from the stock market (no. 388). Competitive Advantage in the
Global Economy (CAGE). Retrieved from.
https://warwick.ac.uk/fac/soc/economics/staff/dnovy/blnsu.
pdfPrice, E. (2018, November 2). Toyota recalls over 1 million
vehicles due to air bag concerns. Fortune. Retrieved from.
http://fortune.com/2018/11/02/toyota-recalls- 1-million-
vehicles-air-bag-concerns/ Elton, E. J., Gruber, M. J., Brown, S.
J., & Goetzmann, W. N. (2009). Modern portfolio theory
and investment analysis. Hoboken, NJ: John Wiley &
Sons.Tang, K., & Xiong, W. (2012). Index investment and the
financialization of commodities. Financial Analysts
Journal, 68(5), 54-74.

Beta and Portfolio return
Capella University
Portfolio analysis
My portfolio comprises stock from five major companies which
are promising to have very attractive returns. The companies
include Toyota Motors Corporation, Ford Motors Company, Fiat
Chrysler Automobiles, Novartis AG, and Pfizer Incorporation as
well as Eli Lilly and Company. The article is a report on the
portfolio analysis obtained from analysis of the company’s
stock returns for the past week. The analysis included the stock
risk and expected returns based on their daily movement in the
stock market.
The first analysis is on the stock risk which is obtained by
calculating the stock’s beta, a stocks beta is obtained from the
variance of the daily stock closing prices. The other factor
involved in calculating the stocks beta is the covariance
between the stock and the benchmark asset, the S&P 500 is used
in this analysis as the benchmark asset. Based on the above
factors, the stock register different beta which depends on the
variance and the covariance of the asset with the market
benchmark. The stock have a beta of less than one although
some have positive beta while others have a negative beta. The
stocks are in line with my investment objectives which is to
maximize returns while minimizing risk which depends on my
ability to diversify the stocks
Most of the stocks have a positive beta which is less than one,
this means that although the stocks have a positive movement
with the market, they tend to be less volatile than the market
returns. The stock with the same stock returns movement as the
market are the Pfizer Incorporation as well as Eli Lilly and

Company. This stocks will have their returns vary in the same
way as the market variations. There are also stocks that move in
different directions with the market returns. The Novartis AG is
included in my portfolio since it has a negative movement
compared to the market returns, it therefore means the stock is
very important in diversifying market risks. There are stocks
with a beta of zero and they also form an integral part of my
portfolio since they are neither positively nor negatively related
to the market returns, it therefore means that they do not change
compared to the market returns, the two stocks are Toyota
motors stock and Fiat Chrysler Automobiles.
The analysis goes further to the expected stock returns which is
obtained from online calculator. The expected individual stock
returns help in calculating the expected portfolio return based
on the weights of the stocks and their respective expected
returns. The resulting figure from the calculation is 3.445%
which is higher than the market returns and also the risk free
rate returns. This means that the stocks are well performing
since the risk premium is positive and therefore doing away
with some of the stocks will mean a negative returns for my
portfolio. Although the returns are positive, they are quite small
and this means that there is need to review my portfolio by
either adding more assets with higher returns or exchanging the
returns. On the other hand, since the diversification of the
portfolio enables gaining when the market is performing poorly,
there is also the option to retain the stock in my portfolio the
same way they are but changing their weights in the portfolio.

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