Julia Gangemi

FINA2209

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 Warren Buffet does not split the costs of the shares when they rise, resulting in such a high market value per share. He does this so that investors have to be serious about buying stock in Berkshire Hathaway.

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 Berkshire Hathaway’s P/E ratio at the end of the day Friday was 50.29. This is a very high P/E ratio, meaning the market value per share is 50 times higher than the earnings per share.

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 Investors may consider an income stock because they pay dividends regularly and are less of a risk than a growth stock. However, growth stocks usually have a higher total return. This is probably why Warren Buffet chooses for BRKA to have growth stocks.

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 Berkshire Hathway doesn’t pay dividends to its shareholders as CEO Warren Buffet believes that the company’s cash can be invested back into the company, which in the long run is more valuable to the shareholders. They one time they paid dividends was in 1967

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 Berkshire Hathaway reported almost a $50 billion first quarter loss in 2020. This could be a result of CEO Warren Buffett’s lack of recent investments, with little risk comes little return!

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 Due to the airline industry’s recent decline after the coronavirus outbreak, Berkshire Hathaway sells all of its stock in airlines including United, American, Southwest, and Delta worth billions of dollars

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 Berkshire Hathaway has about $100 billion in excess liquidity which CEO Warret Buffet has been holding off on spending as he has not found any investment opportunities that seem valuable to him or worth spending their capital budgeting on

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 According to the Moody’s credit rating, Berkshire Hathaway is rated an Aa2, which is the third highest credit rating. This means the company is likely to meet it’s financial commitments.

[Julia Gangemi @Sum20BRKACFO]

#FIN2209 Their stock is currently the highest priced stock in the entire world. The reason the cost is so high is because of the decision made by their CEO to not split the shares as the price rises. This means there are fewer shares at high prices.

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #FIN2209 Berkshire Hathaway’s stock at the end of the day on May 22 was valued at $264,094.00. The expected value of their stock is found by multiplying their P/E ratio 43.97 by their EPS $8.80, which is $386.94. This means that their stock is highly overvalued.

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #Fin2209 If the return rate is now only 4%, this means she will have to save $11,567.44 a year in order to just reach $1,400,000 by the time she is 65. This means she would have to put away about $32.50 a day.

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #Fin2209 If the student saves 3$ everyday, and invests $1095 at the end of every year, then she will have $1,487,261.89 by the time she is 65. This is found using the excel function FV, where the r is 0.12, periods is 45, the amount is 1095, and the present value is 0.

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #Fin2209 A 5-7% return is much more realistic than 12% return in today’s investment climate. In order to make more money with a smaller rate, she could either increase the amount of money she is investing or increase the number of times she invests, say monthly instead of yearly

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell #Fin2209. Berkshire Hathaway’s gross profit margin is 22.05% as of May 2020. Last year, in December 2019, BRK’s gross profit margin was 41.2%. This means the margin has almost halved since last December. This decrease could be due to the current pandemic we are experiencing.

[Julia Gangemi @Sum20BRKACFO]

@ProfLowell Berkshire Hathaway reports a current ratio of 3.90 and a quick ratio of 3.52. Since these values are much greater than 1, this shows BRK.A has plenty of assets to cover its liabilities. #Fin2209

[Julia Gangemi @Sum20BRKACFO]

I am choosing to analyze Berkshire Hathaway (BRK.A) as it is one of the largest, top perorming companies in the nation. I am excited to learn more about how BRK.A has become so successful! #Fin2209 @ProfLowell