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1.
If a company's ROIC (return on invested capital) exceeds _______ for a several years, it most likely has an economic moat.
15%. Provided that it occurs for a number of years, this figure suggests a moat.
2.
When using net profit margin to look at the relative efficiency of companies, it is best to use it _______.
Within the same industry. It is best to use both net profit margin and turnover in isolation only if looking at very similar companies.
3.
Which of the following ROAs (return on assets) suggests that a company has an economic moat?
20%. If a company has generated ROAs in excess of 10%, the company may indeed possess such a moat.
4.
Which expenses are not subtracted from sales when calculating NOPAT (net operating profit, after taxes)?
Interest. Interest expenses are not subtracted from operating profit when calculating NOPAT. Taxes (the "AT" in NOPAT) obviously are, while COGS are subtracted from sales to get to operating profit.
5.
There are three main types of profit margins used by companies. Which of the following is not one of them?
Capital margin. This is not one of the margins used.
