Paulie Gualtieri is a financial analyst in the industrial-trend research team in the research department of...
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Paulie Gualtieri is a financial analyst in the industrial-trend research team in the research department of IFA. Gualtieri is assigned to examine the sensitivity of each industry's operational performance on the changes in monetary policy. He collects the median asset turnover, return on equities, net profit margin, and gross profit margin of four industries from the most recent annual accounting reports and tabulates the data in the table shown below. Today, one of Gualtieri's colleagues, Silvio Dante, reports his prediction on the future Federal Funds Rate in the U.S. in the coming months. Dante suggests an increasing Federal Funds Rate in the coming months. According to Dante's report and the data he collects, Gualtieri suggests that the Earnings Per Share (EPS) of healthcare and high-tech companies would be less affected by the increasing interest rate in the next year than consumer goods companies and manufacturing companies. Q: Is Gualtieri's suggestion on the healthcare and high-tech companies' future EPS justifiable? Why? Median Asset Turnover Median Return on equities Median Gross Profit Margin Median Net Profit Margin Median Ratios by Industry Consumer Healthcare Goods 1.18 0.09 0.35 0.02 0.27 0.36 0.41 1.34 Hi Tech 0.32 0.23 0.62 0.97 Manufacturing 0.71 0.08 0.35 0.03 Paulie Gualtieri is a financial analyst in the industrial-trend research team in the research department of IFA. Gualtieri is assigned to examine the sensitivity of each industry's operational performance on the changes in monetary policy. He collects the median asset turnover, return on equities, net profit margin, and gross profit margin of four industries from the most recent annual accounting reports and tabulates the data in the table shown below. Today, one of Gualtieri's colleagues, Silvio Dante, reports his prediction on the future Federal Funds Rate in the U.S. in the coming months. Dante suggests an increasing Federal Funds Rate in the coming months. According to Dante's report and the data he collects, Gualtieri suggests that the Earnings Per Share (EPS) of healthcare and high-tech companies would be less affected by the increasing interest rate in the next year than consumer goods companies and manufacturing companies. Q: Is Gualtieri's suggestion on the healthcare and high-tech companies' future EPS justifiable? Why? Median Asset Turnover Median Return on equities Median Gross Profit Margin Median Net Profit Margin Median Ratios by Industry Consumer Healthcare Goods 1.18 0.09 0.35 0.02 0.27 0.36 0.41 1.34 Hi Tech 0.32 0.23 0.62 0.97 Manufacturing 0.71 0.08 0.35 0.03
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Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley
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