You Are Attempting to Estimate Expected Earnings Per Share for a Major

question 62

Multiple Choice

You are attempting to estimate expected earnings per share for a major stock market series.You have determined an appropriate estimate for sales per share.Which of the following methods can be used to estimate the profit margin?

• A) Base the estimate on recent trends of net profit margins.
• B) Estimate the net before tax (NBT) profit margin along with a tax estimate.
• C) Incorporate an estimate an operating profit margin, defined as earnings before interest, taxes, and depreciation.
• D) All of the above methods are appropriate.
• E) None of the above methods are appropriate.

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Definitions:

Scatterplots

Graphical representations using dots to show the relationship between two variables, each dot representing an observation in the dataset.

Linear Model

An approach in statistics that assumes a straight-line relationship between the dependent and one or more independent variables.

Model

A simplified representation, often mathematical, of a process or relationship between variables used to predict or explain real-world phenomena.

Applicable

Relevant or appropriate in a given situation or context.