Exam 7: Analyzing Common Stocks

Which measure of the business cycle represents the market value of all goods and services produced in a country over a twelve-month period?

List and explain the various stages of the growth cycle of an industry. Also discuss the merit of investing in the industry during each of the various stages.

A company has a net loss for the year of $(10,000,000) and a deficit (negative equity) of $(1,000,000). ROE will be

Generally, the market price of a stock is

The purpose of economic analysis is to gain an insight into the underlying health or vitality of the economy and to formulate expectations about future security prices.

On December 31, the Gold Standard Company reported the following information on its financial statements. According to this information, the company's current ratio is approximately

The consumer electronics would be most significantly affected by

Changes in stock prices tend to lag changes in level of economic activity by several months.

The security analysis process should help investors to I. purchase investments that are priced at or above their intrinsic value. II. sell investments that are priced at or above their intrinsic value. III. purchase investments that are priced at or below their intrinsic value. IV. identify investments appropriate for their goals.

Top-down security analysis

For their last fiscal year, the Short Company reported the following information. What is the accounts receivables turnover rate?

Which of the following accounting practices are potentially misleading or even fraudulent? I. writing off goodwill as an extraordinary loss II. using accrual rather than cash basis reporting III. off-balance sheet liabilities IV. recognizing revenues prematurely

Name at least three economic variables that the affect the stock market and describe their effects.

Which of the following factors are considered when analyzing an industry? I. the nature and conditions of governmental regulations II. the involvement and relations, if any, with labor unions III. the development of new technologies relevant to the industry IV. the extent of competition within the industry

Rising interest rates tend to

Top-down security analysis begins with

Marco's just reported an EPS of $1.68 on revenues of $440 million. The company has 12 million shares outstanding. Total assets are $280 million, current liabilities equal $48 million, and long-term debt is $112 million. Net fixed assets are worth $230 million. Given this information, which one of the following statements is correct?

A companies ratios are more meaningful when compared to other companies in the same industry.

Amgen's debt to equity ratio is .54 while Walmart's is .68. By comparing these ratios we can conclude

Investors who conduct industry analyses typically favor companies with strong market positions over companies with less secure market positions because firms with strong market positions tend to I. be price leaders. II. benefit more from economies of scale. III. have better R&D programs. IV. have lower production costs.