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Questions and Answers
What is a key consideration when estimating revenue growth over time?
What is a key consideration when estimating revenue growth over time?
How is the target operating margin typically set for a firm?
How is the target operating margin typically set for a firm?
What is a common method for estimating the capital needed for revenue growth and operating margin targets?
What is a common method for estimating the capital needed for revenue growth and operating margin targets?
How is return on capital (ROC) calculated?
How is return on capital (ROC) calculated?
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What happens to the sales-to-capital ratio as revenues grow over time?
What happens to the sales-to-capital ratio as revenues grow over time?
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Why is it crucial to adjust the current margin towards the target margin?
Why is it crucial to adjust the current margin towards the target margin?
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What is a fatal flaw of management forecasts according to the text?
What is a fatal flaw of management forecasts according to the text?
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How is growth earned by a company?
How is growth earned by a company?
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What is one way a company can achieve growth through new investments?
What is one way a company can achieve growth through new investments?
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How is operating margin growth typically achieved by a company?
How is operating margin growth typically achieved by a company?
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What is required for a company to grow its earnings, according to the text?
What is required for a company to grow its earnings, according to the text?
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In valuing companies, relying on analyst forecasts can lead to what issue according to the text?
In valuing companies, relying on analyst forecasts can lead to what issue according to the text?
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What is the formula for calculating the expected growth rate in operating income?
What is the formula for calculating the expected growth rate in operating income?
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What is defined as the 'efficiency growth' in the context of return on capital?
What is defined as the 'efficiency growth' in the context of return on capital?
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What does a firm's reinvestment rate of 50% signify in the context of growth rate calculation?
What does a firm's reinvestment rate of 50% signify in the context of growth rate calculation?
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How is the efficiency growth calculated when a firm's return on capital changes from 8% to 10%?
How is the efficiency growth calculated when a firm's return on capital changes from 8% to 10%?
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In the context of sustainable growth, what do fundamental growth equations assume about a firm?
In the context of sustainable growth, what do fundamental growth equations assume about a firm?
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Why is growth from new investments considered sustainable compared to efficiency growth?
Why is growth from new investments considered sustainable compared to efficiency growth?
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