A Financial Analyst Is Comparing Two Companies Using a Top-Down

question 8

Multiple Choice

A financial analyst is comparing two companies using a top-down approach. Which of the following would cause problems in the evaluation process?

• A)One company's fiscal year-end is October 31, while the other company's fiscal year-end is December 31.
• B)One company has been in business significantly longer than the other company.
• C)Inflation has been low for several years.
• D)The companies operate in different industries.

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Definitions:

Time Horizons

The length of time over which an organization or individual projects, plans, or expects to achieve its goals.

HR Forecasting

The process used in human resources planning to predict an organization’s future need for employees based on its business goals and strategies.

Attrition

The process of reducing an HR surplus by allowing the size of the workforce to decline naturally because of the normal pattern of losses associated with retirements, deaths, and voluntary turnover.

HR Surplus

A situation in which the organization has more human capital than it requires in order to meet its current or forecasted human capital requirements.