Skip to content

NISM Certifications · NISM-Series-XV: Research Analyst · Qualities of a Good Research Report

A report states: 'Company A's net profit was Rs 200 crore on sales of Rs 2,500 crore, so the net profit margin is 8%. We estimate the margin will rise to 10% next year on cost savings.' Which statement about this passage is correct?

The 8% margin is a historical figure computed from reported profit of Rs 200 crore on sales of Rs 2,500 crore, while the 10% margin is a forecast resting on an assumption of cost savings. A good report identifies this difference and states the assumption.

  1. ABoth the 8% margin and the 10% margin are historical facts
  2. BThe 8% margin is a computed historical figure and the 10% margin is a forecast based on an assumptionCorrect
  3. CThe 8% margin is an opinion and the 10% margin is a fact
  4. DNeither figure can be verified or is an estimate

Explanation

200/2,500 = 8%, derived from reported numbers, so it is a historical computation. The 10% is the analyst's expectation depending on cost savings, so it is a forecast resting on an assumption that should be stated.

Did you get it right without looking?

One question tells you little. A timed set on Qualities of a Good Research Report shows your real accuracy, how long you take and where you lose marks.

Practise Qualities of a Good Research ReportFree diagnostic mock

More Qualities of a Good Research Report questions