Questions from Corporate Finance

Q: Why is the effective annual rate (EAR) superior to the

Why is the effective annual rate (EAR) superior to the annual percentage rate (APR) in measuring the true economic cost or return?

Q: What are the three major shortcomings of ROE?

What are the three major shortcomings of ROE?

Q: What is the purpose of the DuPont system of analysis?

What is the purpose of the DuPont system of analysis?

Q: What is the equation for ROA in the DuPont system, and

What is the equation for ROA in the DuPont system, and how do the factors in that equation influence the ratio?

Q: In what three ways can a financial manager choose a benchmark?

In what three ways can a financial manager choose a benchmark?

Q: Explain what the SIC codes are, and discuss the pros and

Explain what the SIC codes are, and discuss the pros and cons of using them in financial analysis?

Q: What are the limitations on traditional financial statement analysis?

What are the limitations on traditional financial statement analysis?

Q: List some of the problems that financial analysts confront when analyzing financial

List some of the problems that financial analysts confront when analyzing financial statements?

Q: Explain how the DuPont identity allows us to evaluate a firm’s performance

Explain how the DuPont identity allows us to evaluate a firm’s performance?

Q: What is a time line, and why is it important in

What is a time line, and why is it important in financial analysis?