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1.) The four major financial statements required by the SEC are the Balance Sheet, Income Statement, Statement of Stockholder Equity, and Statement of Cash Flows.

The balance sheet shows the ending balances of major classes of accounts for a specific date (Brigham, 2018, p. 233).  Assets are listed first, which are things owned by the company, such as cash, inventories, and equipment (Brigham, 2018, p. 234).  The second section is liabilities and equity.  Liabilities include debts that are owed (Brigham, 2018, p. 236).  The equity section details stock and retained earnings, reflecting ownership.  The balance sheet is important to determining if a company has resources to cover its debts (Fernando, 2022). It can also be used in ratios, like the current ratio and debt-to-equity ratio (Fernando, 2022).

The income statement contains information about a company’s performance over a period of time (Brigham, 2018, p. 237).  It begins with sales, then lists deductions impacting sales, such as cost of goods sold, depreciation, and interest (Brigham, 2018, p. 238).  It arrives at net income available to common stockholders, which is used to calculate earnings per share (Brigham, 2018, p. 239).  The income statement helps investors understand a company’s profitability and growth potential (Loth, 2021).  Several ratios use numbers from the income statement, such as profit margin and times-interest-earned (Brigham, 2018, p. 293 and 291).  Many ratios use items from both the balance sheet and income statement, so it is important to use these together.

The statement of stockholder equity shows how equity changed over a reporting period (Brigham, 2018, p. 240).  Net income is added to retained earnings, cash dividends paid are subtracted, and stock that has been issued or repurchased is added or removed from stock balances previously listed (Brigham, 2018, p. 240).  This statement is important to see how stockholder equity changed over the period, and whether earnings are being paid to investors or reinvested into the company (Brigham, 2018, p. 240).

The statement of cash flows shows how a company used cash throughout the year (Brigham, 2018, p. 242).  It is separated into sections operating, investing and financing sections (Brigham, 2018, p. 242).  This statement is important because it can help determine if the company’s activities are generating enough profit to purchase the assets it needs for growth, and if there is enough cash to pay its debts (Brigham, 2018, p. 244).  Our text also states the net cash from operating activities could be the most important number in the financial statements, since this statement includes both profit and working capital making it hard to hide financial problems (Brigham, 2018, p. 244). 

The ratios discussed make it clear that many numbers in the statements are important to review.  However, many ratios are focused on sales, net income, total assets and total equity.  Additionally, as noted above, our text noted that net cash from operations is important due to tying together profit and working capital, so I would look at this as well (Brigham, 2018, p. 244).

2.) The four major financial statements are:

· The balance sheet- provides information about a company’s assets, liabilities, and shareholder’s equity. Assets must always be equal to liabilities plus shareholder’s equity. It’s important to give a snapshot of the company’s performance.

· The income statement- Tells an investor how much money a company earned in revenue within a certain time period. It’s important to help an investor know if the company is making enough profit to generate revenue.

· The statement of Stockholder’s equity- Shows how the interests of the shareholders have changed over time. It’s important to show the capital attributable to its business owners.

· Statement of Cash Flows- Tells an investor how much money is coming in and out of a business. It is usually split into three parts: operating, investing, and financing activities. It’s important to show how the company is using their money and moving in and out of the company.

If I were an investor, the sections of the financial statement that I would review closely would be the statement of cash flows, the net operating profit after taxes (NOPAT), and the total net operating capital. This can allow me to complete a ratio analysis. These ratios include liquidity, asset management, debt management, profitability, and market value. The book explains that “Downward trends or negative net cash flow from operations almost always indicates problems” (Brigham & Daves 2018). The statement of cash flows will show me the different activities, whether investing, financing, or operating. This will allow me to see how the company is using its money and if it’s being used wisely. If a large portion of the money isn’t being used wisely, I will be able to see the downward trend. Another important aspect I will analyze will be the sales margins. As a company, an investor would do this to “compare your margins against industry standards and their other available investment opportunities” (Najjar 2021). Comparing margin can allow me to see how the company I am looking to invest in is profiting compared to their competitors. A higher margin generally means a higher rate of return for me. Lastly, I would analyze the debt of a company. Debt is something I would take into consideration because there has to be a fine balance between the debt of the company and the money they are making. Too much debt can cause the company to go bankrupt and can cause me to lose my share value. While debt is important to help a business grow, I would be sure that the company is not in so much debt that it will not be able to handle slower periods of the year.

Provide constructive feedback on risk and return relationship Responses encouraged additional discussion.

1.) Standard deviation and beta are two likely things but their is a different because one measure one thing in specific and the other measure other thing. The thing they have in common is that both measure unsystematic risk, so beta only measures systematic and unsystematic while standard deviation measure the total of the total risk. Lastly beta measure the stocks volatility as a whole but it higher their is greater risk on that specific stock. The stock that I choose was Tesla why Tesla is because I like that company and since 2019 I have invest on it. The annual standard deviation is around 68.1% according to abg analytics and it’s one of the top stocks from the s&p100 but it has those days that goes down and up lately has been down. 

2.)   Standard Deviation and Beta both measure volatility of a fun, but in different ways. Standard deviation pertains to the risk of the individual stock itself, whereas Beta’s volatility is found in relation to the market as a whole. SD is more precise, and stocks with high SD generally assumed to have more risk. An investor would use these to determine what risk level the stock presents to it’s portfolio by comparing it to the market and assessing it individually. 

          Alphabet Inc (GOOG) has a Beta of 1.06 and a Standard Deviation of 1.51.  The company’s Beta of 1.06 shows that GOOG is not very volatile and is anticipated to only to up about 6% when the current market begins to decrease. The SD for this stock is actually low relative to similar companies and shows the company currently has a low mean level of risk compared to the current market. I do not believe that these statistics match the CAPM/SML Model exactly, with an anticipated return of 46% it would be just below the CAPM/SML’s depiction, in my opinion. Jensen’s alpha would likely show a depiction of even less than CAPM/SML based on the realized rate of return, versus the anticipated return. The alpha would be calculated and should determine that the earnings more than compensated the risks. Sharpe and Treynor Index should both immolate these findings.

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1.) Becoming a business owner comes with abiding by the political, economic, and legal systems of the territory we choose to provide services.

           Political systems are “the structures, processes, and activities by which a nation governs itself.” (Wild & Wild, 2018, p.73) The different types of political systems are Totalitarianism and Democracy. Being a U.S computer gaming company owner, I will adopt some business strategies by covering my organization with political risk insurance: a policy that compensates affected multinationals and corporations in case of an adverse event in foreign countries. (Phung, 2021) I will also reduce my fixed assets by, for example, renting rather than buying. It will be a way of securing my assets, and in case of political instability, I would not have to suffer a lot of damages.

           Some examples of economic systems around the world are market, centrally planned, and mixed systems. A mixed economic system would be the best for my business expansion. It gives more freedom of enterprise, the freedom of deciding how to run my company, and the ability to have a stranglehold on the future and success of my business while being at the same time protected by the government antitrust and other laws that regulate the business world.

            The classifications of economic development are either developed, newly developed, or developing. A developing economy would be the least likely choice for expansion as the use of technologies and infrastructures is limited and outdated, which will mean higher costs and limitations in the transport and mobility of goods.

2.) Taking any business international is a huge move it is important to understand the country’s market and policies in order to be successful. There are different means of political systems throughout the world democracy, republic, monarchy, communism and dictatorship (politicalsciencedegree.com). The easiest way to maneuver these systems is to stay to countries with the same or similar political system. Those of democracies doing business with other democracies will have similar business ethics and make business a lot easier to conduct. There are different economic systems; a traditional economy, a market, a command and a mixed economy.  A mixed economy would be the best choice to begin our business expansion. With all the aspects of different systems there are many advantages and different avenues that can be taken. Within the different economic operating systems there are different classifications of economic development. This is how far advanced the state of the countries economy is. There are high, upper-middle, lower-middle and low. A high economically developed country can be hard to get into. Since the market is strong on its own it may suggest that they market already has what is needed and may not have room for your product to be successful.