Analysis Intermediate: Start Thinking Like an Analyst

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1.
High switching costs help companies _______.
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Raise prices without the risk of losing customers.
2.
Why are economic moats advantageous?
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They allow a company to generate profits and keep competitors at bay. Companies that reward investors over the long haul are those that have a durable competitive advantage.
3.
What is an economic moat?
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A long-term competitive advantage that allows a company to earn oversized profits over time. A moat protects the business and does not let other businesses in.
4.
Of the following four questions about business analysis, which one would you most likely need outside help answering?
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How well is the business positioned relative to its competitors? For this one, you would need to get information about several other businesses to help you answer it.
5.
Determining the goal of a business is normally easy.
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False. Sometimes it is not easy, because a business might combine different objectives.