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Question
To prioritize strategic actions, the analyst should:
a) Take a vote from the major players.
b) Build a sensitivity analysis that tests multiple changes at a time.
c) Follow the priorities of leaders in the industry.
d) Follow Porter’s five forces analysis.
Answer
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Related questions
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For emerging markets, the recommended input for the risk-free rate for computing beta is:
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When calculating gross investments, it is appropriate to add the increase in the foreign-currency translation reserve to capital expenditures to obtain the actual cash spent on capital investments.
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An analyst should make financial projections of income statements and balance sheets for a valuation in a high-inflation environment by simply projecting all items on a nominal basis.
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A firm that capitalizes R&D has more opportunity to manipulate short-term earnings compared to a firm that expenses R&D.
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If there is no line item for prepaid pension assets or unfunded pension liabilities on a firm’s balance sheet, this means the firm’s pension plan is fully funded.
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Analysts in the investment banking industry multiply rental expenses by 8 times to approximate asset value. Although based on reasonable assumptions, the method is very simple and can both overvalue and undervalue the leased assets.
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The interest rate for operating lease adjustments is usually higher than the firm’s cost of debt.
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