Boken kap 3 del 3

Question 1

What is EBIT?

Answer 1

Profit before interest and taxes

Question 2

What is Days sales in receivable also called?

Answer 2

average collection period (ACP)

Question 2

What are Asset management or turnover ratios focused on?

Answer 2

Efficiency of using assets.

Question 3

What does a Receivables turnover show?

Answer 3

How long until we get the money used in credit sale.

Question 4

What does Asset turnover Show?

Answer 4

The big picture!

Question 5

How do you calculate Book value per share?

Answer 5

(total equity)/(number of shares)

Question 6

Why do you want a high Profit margin?

Answer 6

Because that means that you have low costs according to your sales.

Question 7

What is ROE affected by?

Answer 7

1. operating efficiency (as measured by Profit margin)
2. Asset use efficiency (total asset turnover)
3. Financial beverage (equity multiplier)
   weakness in either of those lower the firms ROE.

Question 8

What is the two different standards to choose a benchmark?

Answer 8

• History. What has happened the last years and is there a reason?
• Peer group, Firms with the same SIC code or NACE code are assumed to be similar.

Question 9

Who uses SIC and who uses NACE?

Answer 9

SIC: UK
NACE: Europe

Question 10

What is the group with the top firms in an industry called?

Answer 10

an aspirant group.

Question 11

What are some Problems with financial statement analysis?

Answer 11

• No theory that can help us identify which quantities to guide us in establishing benchmarks. we cannot say which ratios that matter the most.
• Many firms are conglomerates, owning more or less unrelated lines of business.
• Major competitors and Peer group members can be scattered around the globe.
• Companies in the same business is not always Comparable.