Janet Ludlow is preparing a report on U.S.-based manufacturers in the electric toothbrush industry and has gathered
Question:
a. Select and justify three factors from Table B that support Ludlows conclusion.
b. Select and justify three factors from Table C that refute Ludlowsconclusion. Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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2004 2005 2006 2007 2008 2009 Return on equity Electric toothbrush industry index Market index 12.5% 10.2 12.0% 12.4 15.4% 14.6 19.6% 19.9 21.6% 20.4 21.6% 21.2 Average P/E Electric toothbrush industry index Market index 28.5x 10.2 23.2x 12.4 19.6x 14.6 18.7x 19.9 18.5x 18.1 16.2x 19.1 Dividend payout ratio Electric toothbrush industry index Market index 8.8% 39.2 8.0% 40.1 12.1% 38.6 12.1% 43.7 14.3% 41.8 39.1 Average dividend yield 0.6% Electric toothbrush industry index Market index 0.3% 3.8 0.3% 3.2 0.8% 2.3 0.7% 1.0% 2.2 Table B Ratios for electric toothbrush industry index and broad stock market index Industry Sales Gro per year over the next 3 years. Non-U.S. Markets -Some U.S. manufacturers are attempting to enter fast-growing non-U.S. markets, which remain largely unexploited. Mail Order Sales Some manufacturers have created a new niche in the industry by selling electric toothbrushes directly to customers through mail order sales for this industry segment are growing at 40% per year ry sales have grown at 1 5-20% per year in recent years and are expected to grow at 10-15% . U.S. Market Penetration-The current penetration rate in the United States is 60% of households and will be difficult to . Niche Markets-Some manufacturers are able to develop new, unexploited niche markets in the United States based on . Industry Consolidation-Several manufacturers have recently merged, and it is expected that consolidation in the . New Entrants New manufacturers continue to enter the market. increase Price Competition- Manufacturers compete fiercely on the basis of price, and price wars within the industry are common. company reputation, quality, and service. Industry will increase. Table c
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