Exam 15: Company Analysis

Regardless of how closely a company adheres to good accounting practices and auditors do their job, investors need to examine "Notes to the Financial Statements" on 10-K and 10-Q Reports to understand the company's financial situation.

The two components of ROE are:

In investments, "dead money" refers to past investments in assets that are recorded as retained earnings on the balance sheet.

It is necessary to determine a point estimate of the intrinsic value of a stock when using relative valuation techniques.

Since extraordinary items affecting earnings are typically non-recurring, investors should disregard their impact on earnings when evaluating the stock.

An investor applying a growth at a reasonable price (GARP) investment strategy, would most likely select stocks with relatively:

Firm ABC and Firm XYZ both have ROAs of 12%; however, Firm ABC has a much higher ROE than Firm XYZ. Which of the following do we know to be true? Relative to Firm ABC, Firm XYZ has a lower:

A firm's sustainable growth rate can be calculated as the product of:

On a company's balance sheet, shareholder's equity is measured in:

Which of the following is not one of the relative valuation multipliers used in fundamental analysis?

Which of the following statements is true?

For the coming year, Internet Industries expects to earn $5.00 and pay a $2.00 dividend. Its ROA is 13 percent, while its leverage factor is 1.7. (a) Calculate the expected growth rate in dividends. (b) Given a required return of 17 percent, determine the estimated price for Internet Industries' common stock. (c) Calculate the expected dollar dividend two periods from now. (d) Calculate the estimated stock price one period from now.

Which of the following would increase a firm's PEG ratio?

Low P/E stocks are generally associated with:

A positive earnings surprise occurs when the forecasted earnings are greater than the actual earnings of a company.

Fixed assets consist of:

The generally accepted accounting principles (GAAP) require that EPS be calculated using a:

In future periods, YZX Inc. is expected to maintain a dividend payout ratio of 40%, a net profit margin of 4.6%, a total asset turnover of 2.2, and an equity multiplier of 1.35. What is YZX's projected sustainable growth rate?

The last step in top-down fundamental analysis is to:

The investment advisory service best known for evaluating mutual funds is: