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Stocks 305: Quantifying Competitive Advantages

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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?
Choose wisely. There is only one correct answer.
Capital margin. This is not one of the margins used.
2.
If a company's ROIC (return on invested capital) exceeds _______ for a several years, it most likely has an economic moat.
Choose wisely. There is only one correct answer.
15%. Provided that it occurs for a number of years, this figure suggests a moat.
3.
You've probably discovered a good cash machine if a company's free cash flow is more than _______ of sales.
Choose wisely. There is only one correct answer.
5%. Five percent is generally accepted, though you should investigate the company further.
4.
Which of the following ROAs (return on assets) suggests that a company has an economic moat?
Choose wisely. There is only one correct answer.
20%. If a company has generated ROAs in excess of 10%, the company may indeed possess such a moat.
5.
Which of the following is an example of a non-interest-bearing current liability?
Choose wisely. There is only one correct answer.
Accounts payable. Accounts payable are the most common non-interest-bearing liability. Short-term debt bears interest, while accounts receivable is an asset.