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Stocks 305: Quantifying Competitive Advantages

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1.
Which of the following ROAs (return on assets) suggests that a company has an economic moat?
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20%. If a company has generated ROAs in excess of 10%, the company may indeed possess such a moat.
2.
If a company's ROIC (return on invested capital) exceeds _______ for a several years, it most likely has an economic moat.
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15%. Provided that it occurs for a number of years, this figure suggests a moat.
3.
Which expenses are not subtracted from sales when calculating NOPAT (net operating profit, after taxes)?
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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.
4.
There are three main types of profit margins used by companies. Which of the following is not one of them?
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Capital margin. This is not one of the margins used.
5.
Which of the following is an example of a non-interest-bearing current liability?
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Accounts payable. Accounts payable are the most common non-interest-bearing liability. Short-term debt bears interest, while accounts receivable is an asset.