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Steps To Create An Investment Portfolio (Accounting for Decision Making)

Accounting for Decision Making

Creating an investment portfolio is an important assessment of the course called ‘Accounting for Decision Making’. The investors are now increasingly employing finance professionals to dig out the life and death of an organisation before they invest in the same. In that event, you will most likely be asked to prepare an investment portfolio.

But before you can prepare portfolios for professionals like Warren Buffet, banks like Goldman Sachs, Barclays or JP Morgan Chase, you need to prepare the same to impress the professor.

Prepare a really well investment portfolio and you will actually be sleeping with money.

Learn to Watch The Australian Share Market

To create an investment portfolio for the assignments, you need to work as an actual finance professional and make your way through the report by observing and planning as per the shares of the company.

The best strategy for that is to monitor the share performance over a tracking period through the official website of Australian Securities Exchange (ASX) website. With this, you can also see if the value of the share portfolio can be increased or not.

That’s also one way of making the share market your slave but it doesn’t end well for the either party. Better to play it safe and sound.

Research About the Company Provided

You will most likely be given a choice to chose one out of many companies in a list. You have to conduct a thorough research of the company and mention the key details that are needed to be known about the organisation before you are investing in the same.

That includes –

  • The products and services offered by the company
  • The net profit or loss of the organisation
  • Latest dividend that was paid
  • The approximate number of employees in the company
  • The highest price of the share and the lowest price over a period of 52 weeks

Keep Track of Share Movement

For the share price movement, you need to present a report in the form of a report that tells how much did the stocks rose and how much they fell.Other than this, you also need to stay up to date with the All Ordinaries Index. Now you must be wondering what in lord’s name is an All Ordinaries Index.

All Ordinances Index (or AOI) is the share prices of the top 500 companies in the Australian Securities Exchange.

Wonder how fortune 500 company employees look like? They look like this.

You, as a potential investor of future or a manager for an investor, will always try to make it to the big boy table when it comes to earning returns of the investment. That is why you also keep track of the All Ordinances Index.

Compare Your Shares with All Ordinances Index

Before you go all diving and searching for the comparison, understand that the All Ordinances Index is not fixed and that it too varies.

Have you seen the movie The Big Short (2015)? No? That movie is a perfect example of investment and you will see a great deal many instances where your inner financer will learn. So, the movie was based on the US 2007 subprime mortgage financial crisis. That affected All Ordinances Index really bad throwing it down by 24%.

So, to check how well your business is doing, you have to compare the performance of the same against the All Ordinances Index. The preferred sources that you should include in your report here to collect information are –

  • Newspapers
  • Business magazines
  • Company website
  • Research articles

Gain and Loss Calculation

The gain and loss in the investment are not calculated as dollars or money. Well, they can be calculated as such but we don’t prefer doing it that way. The professors prefer that the loss and gain on the investment are presented as a percentage.

What exactly is the gain or loss in investment? Suppose there is some money with you that you want to invest somewhere. A friend came to you saying that Apple Inc. is selling some of their shares and each share costs $100. You say alright and buy 100 shares today. So, how much did you invest?

(100 shares) x ($100 per share) = $100,000

Now, it is tomorrow and Apple Inc. announced that they are bringing out a new iPhone. The people will try to buy their way into the profit, buy shares and the price goes up. You say I will sell my shares for $200 per share. All your shares sold in an hour. You sold for more than you bought, you earned a profit.

(100 shares) x ($200 per share) = $200,00

Your gain will be (Sold Price – Purchase Price)/Purchase Price; i.e. ($200,000 – $100,000)/$100,00 = 100%.

This gain is the realised gain.

Imagine Apple Inc. said that they are shutting down one of their factories. The people will try to lose responsibility as soon as they can and will sell their shares for whatever price that is offered. That price is generally lower than the one you bought it for. This is realised the loss and the formula for this is totally the same but the loss will be negative.

There is also something called unrealised gain or loss where people check how much loss or gain they have made till now without selling. Then, it will be (Current Share Price – Purchase Price)/Purchase Price.

Recommendation

On the basis of the data that you found, you will decide to either buy more stock, sell an existing stock or hold what you have right now.

This recommendation is made on the basis of –

  • Revenue of company
  • Interest expense
  • Net profit with and without tax
  • Assets
  • Liabilities
  • Equity

Ahem, Attention Please

That’s what happens when you try this assignment without knowing much about it or trying to pull off an all-nighter. So, here we have accounting for decision making assignment help experts. You can consult them one-on-one for a guidance or email us your assignment requirements here. There is the best option, you can fill out the form here and we will get back to you.

Author: Julia Martin

Julia Martin has been a teacher, private academic expert and has held the position of an accounting manager at a firm in Melbourne. She joined My Assignment Services as an accounting assignment writing expert and have grown since then to become one of the best accounting assignment experts in the assignment help industry. She has worked with students of several universities and has even aided students from Singapore, the United Kingdom, etc. with her expert consultation. She writes blogs for students to help them understand the accounting assignments’ concepts, principles and theories.

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