# data[].attributes.body
Zirui Xu and Yuchen LI

# data[].attributes.body
Choose Winter

it has lower financial risk and higher financial stability,

it has a lower dividend yield

return on capital employed than Summer plc.

1、Summer Dividend yield  higher than Winter  8.75%: 2.0%

Low price to Earning ratio 8.0 : 16.7 times

may offer a better return on investment through dividends.

2、Winter plc has a higher earnings per share (21p vs. 15p)

a higher dividend cover (3.0 times vs. 1.43 times) than Summer plc

Winter plc may be more financially stable

3、Summer plc has a higher return on capital employed (9.3% vs. 4.4%) than Winter plc,

He will get more investment profit

4、Summer plc has a higher capital gearing (70% vs. 25%) than Winter plc,

means that it has a higher level of debt relative to equity. This may increase its financial risk, as a downturn in the business could make it harder to repay debt.

5、Cost, Depreciation , Carrying amount  Winter better than Summer , Winter is more stable for investment by Bob

# data[].attributes.body
Bob may want to consider investing in a company with a lower level of capital gearing to reduce risk. Capital gearing refers to the ratio of debt to equity financing used by the company, and a lower ratio indicates that the company is less leveraged and has lower financial risk.

Comparing Summer plc and Winter plc, Winter plc has a capital gearing ratio of 4.4%, which is lower than Summer plc's ratio of 9.3%. As a result, Winter plc appears to be less leveraged and therefore has lower financial risk.

# data[].attributes.body
Winter plc 's operation is better than Summer plc. The reasons are shown below.

Number of shares invested:
Summer =50000/1.2=41667
Winter=50000/3.5=14285

Expected income
Summer=41667*15p=625000
Winter=14285*21p=300000

For the investors, they focus on the financial ratio of the company. As you can see in the table, the capital gearing of Summer plc is much higher than Winter plc, which is 70% and 25% in each, which means Summer plc has more debt than Winter company, so the company may face more risk of debt unpayable, and finally affect the company's going concern problem.

Besides, the P/E ratio and EPS of Summer plc is both lower than Winter plc. which represent 8.0 and 16.7, 15p and 21p for each. These two ratios mean that the Summer plc has lower profitability than Winter in the future.

What's more, although the ROCE of Summer plc is higher than Winter plc (9.3% and 4.4%), it cannot be concluded that the Summer plc's profitability is high than Winter plc, because the carrying amount of PPE in Summer plc is much higher than Winter plc (30m and 270m). This figure will affect the ROCE of the company.

Finally, the fluctuation of the company's share price in summer is higher than Winter plc, which means the profitability in Summer is not stable than Winter plc.

# data[].attributes.body
1)Profitability
ROCE of Summer plc is higher, which means it has better usage and freely capital on its resources to generate profit
2)Leverage
Gearing Ratio of Winter plc is much lower, which means it’s Capital Structure is less volatile and less risky, and Summer PLC has higher GR, which means maybe it borrowed too much money and didn’t pay back, If overdue ,it’s more risky and may have a bankruptcy,
3)Investment
Market Price of Winter plc is higher, which means people are having more expectations on this company.
Both EPS and P/E ratio are higher in Winter plc, which indicates that the company earn more profit on each share and higher earning power and financial position , The public has higher expectations of the company and it have enough confidence.
Summer plc has higher Dividend Yield, which means the company are giving more returns to the investors on each share.
Both of the companies have Dividend Covers greater than 1, which means none of them are using their retain gains on profit to fill up the dividends they are paying now. However, Winter plc has got more Dividend Cover than Summer plc, which means they are more capable of using the profit newly generated to cover the new dividends to pay in the future, instead of using past earnings to pay current dividends.
4)from what has been mention above , if Bob is Low-risk investors he prefer to invest a medium or long term investment, he should be investing Winter plc, because it is more stable, since the company has healthier Capital Structure, although  a more promising and less risky future, and more likelihood to get investments back if the company goes liquidated.

5)In the previous data, we didn't know what Net Profit is and Numbers of Dividend, but we have Earning Per Shares, which equals Net profit/Number of shares, and Dividend Per Share equals Dividend/Numbers of Shares, so we can know that Dividend Cover equals Net Profit/Total Dividend.

Winter PLC
Dividend Yield=DPS/Market Price per Share=7.0/3.5=2
Dividend Cover=Net Profit/Ordinary Share Dividends Paid=EPS/DPS=21p/7p=3

Summer PLC
Dividend Yield=DPS/Market Price per Share=10.5/1.2=8.75
Dividend Cover=Net Profit/Ordinary Share Dividends Paid=EPS/DPS=15p/10.5p=1.42

# data[].attributes.body
eps is the company's net income, winter plc is higher
summer plc is higher in terms of dividend payments at 7.0p
roce: winter is more efficient in terms of using capital
Risk minimized summer plc is more appropriate, low risk high return
Want high risk and high return, choose winner plc, higher profit

# data[].attributes.body
（hanzhou wang，yunxiang zhang）
To minimize his risk, Bob may want to consider investing in a company with a lower price-to-earnings (P/E) ratio and higher return on capital employed. Based on this criteria, Summer plc appears to be a better choice as it has a lower P/E ratio of 8.0 and a higher return on capital employed of 9.3%. Additionally, Summer plc has a higher capital gearing of 70%, indicating that the company may have a higher level of debt, which could increase risk. However, Bob should also consider the size of the companies and their potential for growth. Winter plc has a larger carrying amount of property, plant, and equipment, which could indicate that the company has greater potential for growth. Ultimately, Bob should consider a range of factors before making a decision, including his investment goals, risk tolerance, and overall market conditions.

# data[].attributes.body
(Shiyuan Yang, Weijie Gao, Yitian Wang)
Winter plc should be a better choice
Summer plc

The share price changed significantly last year, the lowest price is less than half of the highest price, which means its share price is unstable.

Numbers of shares: 50,000/1.2=41,666

dividend= 41,666x0.105=4,374.93

(More dividend)

The ROCE is higher, which means better profitability. However the Capital gearing is very high, reached 70%, this suggests that the company has a large amount of long term debts and has a high risk.

The  carrying amount of asset is much smaller, it’s only 11% of the other company. This may implies that it is a small company and will have insufficient asset to support the business.

The market expectation on this company is lower, since the price to earning ratio is lower than the other.

Winter plc

The share price is relatively stable since the change last year is small.

The earning per share is higher, which indicates that shareholders will earn more when the company makes profits.

Numbers of shares: 50,000/3.5=14,285

Dividend=14,285x0.07=999.95

(Less dividend)

The ROCE is lower, which means less profitable. However the Capital gearing is ideally low, this suggests that the company has appropriate amount of long term debt and is less risky.

The  carrying amount of asset is bigger, 9 times more than the other company. This may implies that it is a larger company and will have adequate asset to support the business.

The market expectation on this company is higher, since the price to earning ratio is higher than the other.

Conclusion

Overall, the winter plc has a stabler performance and higher expectation. For a low-risk investment, winter plc is the better choice.