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1.
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.
2.
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.
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.
What does a company's turnover ratio measure?
How efficiently the company uses its assets to generate sales.
5.
You've probably discovered a good cash machine if a company's free cash flow is more than _______ of sales.
5%. Five percent is generally accepted, though you should investigate the company further.
