Question

Q1. The strongest ROS ratio is reported by (AEO / GPS / ______________ ). ROS expresses net income as a percentage of (______________ / expenses / assets) and measures the firm’s ability to control (revenue / ______________ / net income) to keep (revenue / expenses / ______________ ) high.
Q2 Meaning is added to a ratio by comparing it to industry norms because success may vary by industry. An ROA ratio greater than the industry norm is reported by (AEO / ______________ / ______________ ), indicating these companies have (______________ / less) overall profitability than average within the Apparel Store Industry.
Q3. The greatest financial leverage ratio of ______________ is reported by (AEO / ______________ / URBN), which will boost ROA almost (1 / ______________ / 4) times to increase (ROS / ______________ / EPS / PE). The average Financial Leverage for the S&P 500 is (______________ / lower) than the average for the Apparel Store Industry, indicating that the S&P 500 stocks carry (______________ / less) debt on average than the Apparel Store Industry.
Q4. The strongest ROE is reported by (AEO / GPS / URBN), with ROA contributing 17% to ROE and Financial Leverage contributing ______________ to ROE. Therefore, (______________ / Financial Leverage) is the primary driver of ROE. (ROA 17% + Fin LEV 12.5% = ROE 29.5%)
Q5. A Times Interest Earned ratio greater than 4 generally indicates the ability to make interest payments. Companies within the Apparel Store Industry, on average, (______________ / don’t have) the ability to make interest payments.
Q6. The higher EPS is reported by (AEO / ______________), indicating (AEO / URBN / ______________ ______________ ) is more profitable. EPS (does / ______________ ) compare profitability among companies, but (______________ / does not) reflect shareholders’ proportionate share of earnings.
Q7. The companies paying dividends are (______________ / ______________ / URBN). AEO is paying out approximately (25% / ______________ / 75%) of this year’s EPS. The dividend rate of AEO is (more / ______________) than the average for the S&P 500.
Bargain PE < PE Ratio of 10 to 20 < Expensive PE
Q8. Urban Outfitter’s PE Ratio of ______________ indicates there is ______________ of market price for each $1 of EPS. As measured by the PE ratio, (AEO / GPS / ______________ ) stock is the most expensive. Using the PE ratio scale immediately above, AEO has (bargain-priced / ______________ / expensive) stock when compared to EPS. A higher PE ratio indicates (superior / inferior / ______________ ______________ ) stock.
Q9. Overall, which company has the greatest profitability? (AEO / ______________ / URBN) How can you tell?
Which company is assuming the greatest financial risk? (AEO / GPS / URBN) How can you tell?
Which company would you invest in? (______________ / ______________ / ______________) Why?


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  • CreatedSeptember 17, 2015
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