Comparing the Profitability of Shares from Resource Sector - Assignment Example

Dividends during the holding period

1/7/09

To 31/12/09

1/1/10

To 30/6/10

1/7/10

To 31/12/10

1/1/11

To 30/6/11

Total Dividends

ANZ

0

0.74

0

0

0.74

BHP

0.82

0.84

0.9

0.92

3.48

CBA

0

0

1.7

1.32

3.02

CSL

0

0

0.45

0

0.45

FGL

0

0

0.1525

0

0.1525

DJS

0

0

0.18

0

0.18

Q

0

0

0.62

0

0.62

RIO

0

0

0.4927

0

0.4927

TATTS

0

0

0.11

0

0.11

WES

0

0.55

0.7

0

1.25

WOW

0

0

0.62

0

0.62

FMG

0

0

0

0

0

5. Total Profit was 14,971.77; a percentage gain of 16.32%, the contract was therefore profitable
6. The total income from dividends was 3,693.27

 Annual percentage return
The total shares purchased on 1st July 2009      91,756.50.

The investor then sells it on 1st June 2011 for   103,035.00

This gave a profit of 11,278.0.

There was a total of 3,693.27 received as dividends over the two-year holding period.

The investor’s total return over two years is 14,971.27, 16.31% of the initial investment.

The annual return required to achieve 16.31% over two years follows the formula for the compound annual growth rate (CAGR):

(103,035/91,756.50) ^(1/2 (yr)) – 1 = 31.09% annual return

6*(View Excel sheet named table, column 11)

7. *(View Excel sheet named Summery)8. *(View Excel sheet named Chart)9. *(View Excel sheet named Resource Sector)

10.

• Click on the summary sheet and then click on the button named PrintReport to print.

b. Click on the sheet named Table and then click on the button named PrintReport to print.

11. Report.

REPORT COMPARING THE PROFITABILITY OF SHARES FROM RESOURCE SECTOR

Share

Cost of

purchased shares

Cost of

Sales

Profit

Total

Dividends

Percentage

of initial

Investment

RIO

$5,160.00

$8,299

$3,139

$49.27

61.79%

BHP

$10,942.50

$10,950

$7.5

$870

8.01%

Fortescue

$10,100.00

$10,300

$200

$305

5.0%

The shares in the resource sector traded well over the two-year holding period, RIO Resources earned a total of $49.27 dividends for 100 shares and the Market Value (M.V) of $82.99 per share. This lead to a 61.79% total return on the initial investment. The graph below clearly compares the three shares

Graph 1.

Bar graph for different shares in the resource sector against the percentage of initial investment

Interpretation

Comparing the RIO share with other companies in the same sector, it comes out clearly that RIO resources share had the highest percentage of annual return irrespective of the little amount invested.

It is noted that all three shares in the resource sector were profitable.

Knowing the share prices in the market and their market performance is crucial to succeeding in the stock market, it is, therefore, important to access and analyze the rate of annual return per share in order to know the shares to be re-invested and those to be disposed of.

Graphical representation of such data makes it easy to analyze these reports for easy decision-making.

Microsoft excel, therefore, plays a very important role in tabulation and graphical data presentation and analysis. It also provides formulas and functions for easy calculation.