In response to this, the investment committee of PUFF has proposed that mom portion of the fund be Invested In the Philippine stock market, which was observed to have experienced an increase of more than 150 percent in 1993. In line with this, Patricia Tan of ABA Capital was tasked to design a portfolio for the fund in which she plans to Include mostly “blue chips” and other sound “second liners”, thereby taking into consideration Puff’s conservative stance.
So far, Patricia Tan has come up with an analysis of the various stocks included in the portfolio as preparation for a possible Inquiry from the Investment committee on the fund’s performance. In the same year, Peter So was hired by ABA Capital and Investment Corporation and assigned to handle the remaining companies which have not yet been analyzed by Patricia Tan. These companies include Jollied Foods Corporation FOCI Ally Land, Inc. (ALL), and Philippine Long Distance Telephone Company (PLOT).
As of late, Peter has already submitted a report which included an analysis of the companies’ respective industries and a description of the companies’ operations, management and business prospects. Peter So was also able to perform financial ratio analyses on the three companies. However, Patricia Tan thought that a cash flow analysis, which would provide information on the long-term viability of the companies and its ability to generate positive cash flows and pay its obligations. Should also be Included In the report. An evaluation and a comparison of these statements have to be made across the companies we are studying because some of these companies may still be dropped from the list If the analysis shows some financial weaknesses In this area,” Patricia told Peter. Mall Problem Which of the three companies should ABA Capital and Investment Corporation include In Its portfolio for PUFF? Areas of Consideration revises investments in treasury bills have begun to deteriorate, they feel the need to revisit their investment options.
This is what the stock market is offering them – an opportunity to earn steady returns for their relatively constant financial needs. ABA Capital and Investment Corporation must remember that investing in the stock market is something new to PUFF; hence, they are only willing to set aside a small amount from its fund for such an investment. However, it is very probable that PUFF would be willing to raise and shift its investments into the stock market once it experiences good, steady returns from it.
Contrastingly, PUFF would also be reluctant to raise its investments, if not completely avoid the stock market in the future if ever it experiences less than favorable returns. Analysis of Data The primary goal of ABA Capital and Investment Corporation in analyzing the three companies is to determine which of the three can assure a steady return to PUFF (in the form of cash dividends) each year. Only secondary to this is whether or not these companies have the capacity for further growth. In going about these analyses, we first calculated the dividend payout ratio of each company.
