Question 1

When would the profit margin of an industry be higher?

O When there are very few substitutes for items produced by companies in the industry

O When there are a large number of customers and suppliers.

O When there are very few barriers to entry.

O When there is intense rivalry between companies in the industry.

Question 2

How can you find out whether the increase in a company's return on equity was due to a more efficient use of assets?

O Check if the company's return on assets had increased.

O Check if the company's financial leverage had increased.

O Check if the company's return on sales had increased.

O Check if the company's total asset turnover had increased.

Question 3

Which of the following multiples would be used when valuing a company with uncertain future cash flows?

O Price to earnings

O Enterprise value to price

O Price to book value

O Enterprise value to earnings before interest, tax, depreciation and amortisation.

Question 4

Roosters Limited has a net income of $50,000,000 and 25,000,000 fully diluted shares outstanding. What price range should shares in Roosters Limited be trading in if the PE multiple range for the industry is 7x and 9x?

O $17.50 to $22.50

O $35 to $45

O $14 to $18

O $7 to $9

O $14 to $18

O $7 to $9