Reference no: EM131011711
More on ratio analysis
Analysts and investors often use return on equity (ROE) to compare profitability of a company with other firms in the industry. ROE is considered a very important measure, and managers strive to make the company’s ROE numbers look good.
If a firm takes steps that increase its expected future ROE, its stock price will (never or always or not necessarily)...................... increase.
Based on your understanding of the uses and limitations of ROE, which of the following projects should be chosen if they have the same risk and cost of capital?
(a)Project Y, with 40% ROE and a small investment, generating low expected cash flows
(b)Project X, with 35% ROE and a large investment, generating high expected cash flows
Suppose you are trying to decide whether to invest in a company that generates a high expected ROE, and you want to conduct further analysis on the company’s performance. If you wanted to conduct a trend analysis, you would:
(a)Analyze the firm’s financial ratios over time
(b)Compare the firm’s financial ratios with other firms in the industry for a particular year
You decide also to conduct a qualitative analysis based on the factors summarized by the American Association of Individual Investors (AAII). According to your understanding, a company with one key product is considered to be (more or less)..................... risky than companies with a wide range of products.
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Learning a foreign language
: Does delaying oral practice hinder learning a foreign language? Researchers randomly assigned 25 beginning students of Russian to begin speaking practice immediately and another 25 to delay speaking for 4 weeks.
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Explain what horizontal analysis and trend analysis
: Explain what horizontal analysis and trend analysis are, how the numbers are used, and some of the advantages and disadvantages. Which of the methods of horizontal analysis and trend analysis are best?
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Expect in the operating cash flows next year
: You are the manager of a project that has a 2.8 degree of operating leverage and a required return of 14 percent. Due to the current state of the economy, you expect sales to decrease by 7 percent next year. What change should you expect in the opera..
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Administrative expenses and marketing expenses
: Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; an..
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More on ratio analysis-use return on equity
: Analysts and investors often use return on equity (ROE) to compare profitability of a company with other firms in the industry. ROE is considered a very important measure, and managers strive to make the company’s ROE numbers look good. Based on your..
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Plastic caps for motor oil containers
: A machine fastens plastic screw-on caps onto containers of motor oil. If the machine applies more torque than the cap can withstand, the cap will break.
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What is the value today of the total sum
: Mike wants to buy a new car and pay it off in a decent amount of time. He is willing to initially put a down payment of $10,000 today. The car salesman says that he can give Mike a loan for the rest of the car for $250 a month for the first 6 months ..
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Description of the case and what occurred in detail
: A description of the case and what occurred in detail, An examination of the case in depth that utilizes the seven-step approach to the intelligence cycle. Each step within this process should be a heading in your paper, with the Feedback section i..
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Compute the volume of the solid obtained by rotating ellipse
: Find the volume of the solid obtained by rotating the ellipse around the x-axis and also around the y-axis. These solids are called ellipsoids; one is vaguely rugby-ball shaped.
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