Problem 4: Evaluate your industry in terms of the five factors that determine and industry’s intensity of competition. Based on this analysis, what are your expectations about the industry’s profitability in the short run ( 1 or 2 years) and the long run ( 5 to 10 years)?
Problem 5: Using Standard and Poor’s Analysts’ Handbook or anopther source, plot the lates 10 years history of the opearating profit margin for the S&P Industrial Index or anothe aggregate market setries versus and industry of your choice. Is there a positive, negative, or zero correlation?
Problem 7: Prepare a table listing the variable that nfluence the earning multiplier for your chosen industry and the marker index series for the most recent 10 years.
(a) Do the average dvidend payout ratos for your indystrt abd tge narket index differ? How should the dividend payout influence the difference between the the multipliers?
(c) Analyze and discuss the different components of growth ( retention rate, tatal asset turnover, total assets/equity, and profit margin) for your chosen industry and a market index during the mostrecent 10 years. Based on this analysis, how would you expect the growth rate for your industry to compare with the growth rate of the market index? How would this difference in expected growth affect the multipler?
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