CFA Level I · CFA Level I Exam · Financial Statement Forecasting in Equity Valuation
A company's revenue grew 4% last year. Industry sales grew 10% over the same period. Which conclusion is most likely correct?
Market share fell. Share is company revenue divided by industry sales, and revenue grew 4% while the industry grew 10%. Because the denominator grew faster than the numerator, the ratio declined. Share would be unchanged only if both grew at equal rates.
- AThe company's market share rose
- BThe company's market share fellCorrect
- CThe company's market share was unchanged
Explanation
Market share equals company revenue divided by industry sales. If the numerator grows 4% while the denominator grows 10%, the ratio falls, so share declined. Share would be unchanged only if both grew at the same rate.
Did you get it right without looking?
One question tells you little. A timed set on Financial Statement Forecasting in Equity Valuation shows your real accuracy, how long you take and where you lose marks.
More Financial Statement Forecasting in Equity Valuation questions
- Which of the following is most likely an advantage of a bottom-up revenue forecast for a retailer with many stores?
- Industry sales are forecast at 8,000 million for next year. A firm holds 12.5% market share this year and expects to gain 1.5 percentage poi…
- A company expects 2027 revenue of 800 million and cost of goods sold of 480 million. Based on 2026 ratios, days sales outstanding is 45 days…
- Which statement best describes the main purpose of sensitivity analysis in a financial statement forecast?
- An analyst forecasts a manufacturer's capital expenditures for the next five years. The firm is expanding capacity to meet rising demand. Wh…
- An analyst forecasts a company's revenue by first projecting growth in global economic output, then estimating the industry's share of that …