In Order to Estimate the Mean Earnings Forecast for a Large

question 69

Short Answer

In order to estimate the mean earnings forecast for a large company,an investor looked up earnings forecasts from six financial analysts.The six forecasts he found were 200,220,300,185,210,and 210 (in millions).Suppose the investor knows the population standard deviation is 25 million.Calculate a 95% confidence interval of the population mean earnings forecast.

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Definitions:

Total Current Assets

The sum of all assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business.

Receivables Turnover Ratio

A financial metric indicating how efficiently a company collects its receivables, calculated by dividing net credit sales by the average accounts receivable.

Credit-Granting Policies

Guidelines established by lenders to determine the criteria and conditions under which credit is extended to borrowers.

Vertical Analysis

An accounting method where each entry in a financial statement is listed as a percentage of another item, typically used for comparing companies of different sizes or assessing trends within a single company over time.