financial management (lesson 4)

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Lesson 4

Welcome to Week 4!

This week is a continuation of getting to know and understand the tools needed for company valuation. You will be able to see the connection between stock price, intrinsic value and executive compensation. Additionally, you will examine the different financial tools as it relates to cost and benefits. You will interpret financial statements and internal account reports. Lastly, you will also begin to select stocks in the game simulator.

Now it’s time to play! Purchase the Walmart stock and see what that does to your available portfolio.

Review the rules of playing the games click on the Investopedia Simulator How-To Guide. There are 15 links to review, review 11-15 in the how to guide.

Executive compensation differs substantially from typical pay packages for either hourly workers or salaried management and professionals in that executive pay is heavily biased toward rewards for actual results. Hence, if a company underperforms, the executives typically receive a smaller fraction of their potential pay. Conversely, if a company meets its annual objectives and the stock price responds long term, the executives stand to receive a much larger payout.

Review this article on various components of a typical corporate executive salary.

Research Time- Let’s Search the Databases

Research 5 compensation packages for 5 corporate executives.

  • What does the compensation package include?
  • What surprises you about their packages?
  • What type of company do they run?
  • Is the compensation based on the industry?

Select at least 10 companies for the Watch List in the simulator. Provide a summary of the companies you selected and indicate the reason for your choice. Be sure to select a variety of stocks to watch including various industries and goods as well as services.