Evaluate your industry in terms of the five factors


1. Evaluate your industry in terms of the five factors that determine an industry’s intensity of competition. Based on this analysis, what are your expectations about the industry’s profitability in the short run and the long run?

2. Using Standard and Poor’s Analysts’ Handbook or another source, plot the latest 10 –year history of the preparing profit margin for the S&P Industrials Index, or another aggregate market series versus an industry of your choice, Is there a positive, negative, or zero correlation?

3. Prepare a table listing the variables that influence the earnings multiplier for your chosen industry and the market index series for the most recent 10 years.

a –Do the average dividend-payout ratios for your industry and the market index differ?How should the dividend payout influence the difference between the multiplier?
c- Analyze and discuss the different components of growth for your chosen industry and a market index during the most recent 10 years. Based on this analysis, how would you expect the growth rate for your industry to compare with the growth rate for the market index? How would this difference in expected growth affect the multiplier?

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Finance Basics: Evaluate your industry in terms of the five factors
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